Creditors trying to collect on a debt generally try to pursue amicable solutions whenever possible. Negotiating payment arrangements and cooperating with those who have fallen behind on their obligations is often preferable to aggressive collection efforts.
Unfortunately, many people with substantial debts do not make a reasonable and appropriate attempt to pay what they owe. In fact, they may do the opposite. People change their phone numbers, return mail on open and sometimes even transfer ownership of their property to avoid debt collection efforts.
Creditors in California sometimes have no other choice than to take debtors to civil court. A successful debt-related lawsuit may lead to a judgment in favor of the creditor. They can then potentially seek to enforce that judgment by engaging in more aggressive collection activities. Requesting a lien against real property is sometimes a viable solution for creditors who already have a judgment.
Liens leverage a debtor’s most valuable asset
Liens are essentially blemishes on the title record of a property. They prevent the property owner from transferring their interest to someone else, selling the property or even refinancing without first settling their financial obligations.
After a creditor secures a judgment and records a lien, the homeowner has to make arrangements to pay their debt or could be at risk of losing their property. Creditors who secure liens can sometimes enforce those liens by foreclosing on the property.
That effort may not be necessary, as even those who have done their best to avoid paying a debt may change their financial practices when their homeownership is at risk. In cases where the debt that led to the lien is a consumer debt, it may not be possible to foreclose on the lien. Instead, the creditor may have to wait for the owner to refinance or sell to receive payment.
Thankfully, lenders and title companies usually look for and address liens when preparing for a large transaction. Debtors cannot just ignore a lien indefinitely. Creditors may need assistance reviewing the records of their interactions with a debtor and exploring different debt collection options.
Enforcing a judgment by securing a lien is one way to motivate a recalcitrant debtor to pay what they owe. California law protects the rights of creditors provided that they follow the right process and can prove the validity of an unpaid debt.