Definition and Examples of a Judgment Lien
A judgment lien is a lien imposed by a court order on a debtor’s assets to satisfy debts owed to a creditor. There are multiple reasons for placing a lien on your property, and there are various ways to pay off this lien.
How a Judgment Lien Works
Let’s say you opened a credit card to finance the installation of a swimming pool. You and your partner were confident that you would be able to pay off the card before interest began to accumulate, as it came with a promotional offer of 0% annual percentage rate.
Then your partner lost his job a few months after the pool was completed. You were still able to make the minimum payments on the credit card, although money was tight. The possibility of paying off the debt without interest was dwindling, but you were still engulfed in your debt.
After a few months, you lost your job as well. You were still receiving enough unemployment benefits to cover the mortgage payments and buy groceries between the two of you. But the other debts? They were left behind.
You find out that the credit card company has filed for a judgment against your debt in court. Not only are you in debt for the card for the pool, but you have also accrued a lot of interest and fees due to non-payment.
The court rules in favor of the creditor, but collecting the debt is tough. You both don’t have the money, at least.
What Does a Judgment Lien Mean for You?
Collaborate with the creditor to reach an agreement about your debt if you face a judgment lien on your real or personal property. In addition to forcing the bank to take public sale action on your personal property.
All of these options take time and money, and the creditor may not be interested in spending it. Negotiating with them to create a repayment plan may be the right option in this case.
Takeaway Key Points:
– A judgment lien is a court order to impose a lien on your personal or real property.
– A judgment lien is created for the collection of an outstanding debt.
– Creditors can force you to sell your property to pay the debt.
Sources:
– Courts in California. “Judgment Collection”.
– White Williams, Law Firm. “Duration of Judgment Liens, Expiration, Renewal, or Reinstatement”.
Source: https://www.thebalancemoney.com/what-is-a-judgment-lien-5221421
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