Creditors trying to collect on a debt may feel like they are at the mercy of debtors. It can be very difficult to contact someone who does not want to take responsibility for their financial obligations. It can be even more difficult to convince them to pay their debts if they do not see the value in doing so.
As such, those who do not take responsibility for their financial obligations can cause challenges for others, including businesses that provide them with services or lend them money. Collecting on a debt can prove challenging, especially if a business does not have a dedicated collections department.
Business creditors sometimes choose to take a debtor to court to collect on what they owe. If a judge agrees that someone has not upheld their financial obligations, they may issue a judgment in favor of the plaintiff creditor. One of the ways to use that judgment to obtain repayment involves securing a lien against personal property.
How judgment liens work
A creditor with a judgment can ask the courts to grant them a lien against real property. The business requesting the lien will need the paperwork from the civil court judgment in their favor. They must record the lien at the relevant county recorder’s office. Someone’s primary residence or any investment properties that they hold could be subject to a creditor lien.
A record of the lien will show up during any title search. The debtor will not be able to sell or refinance the property unless they first pay the creditor in full. Most people, including those who have sought to avoid financial responsibility previously, may do whatever is necessary to protect the investment they have made in their homes. They may finally agree to start making payments to remove a lien or avoid its enforcement.
Lien enforcement may involve foreclosure
The creditor granted the judgment and holding the lien can also potentially ask the courts to have the sheriff or U.S. Marshall sell their property if the situation warrants this extreme action. Other times, a debtor might refinance as a way of retaining ownership while simultaneously securing the capital that they require to pay off their debts.
Learning about less common debt collection options, including lien enforcement and foreclosure, may help creditors obtain appropriate repayment from those who have previously refused to take financial responsibility for what they owe.