What Is A Lien? What Kinds Are There?

A lien is bad, but it's not the worst thing that can happen. It happens from time to time, and they must be dealt with.

Getting behind on your mortgage, bills, other payments, and diving further into debt by borrowing money to pay those debts will eventually end up as a lien against your property. 

When the creditors start calling and you ignore them, you're probably thinking what can they do when I have no money. Well the lien is in heir power. 

Creditors power

when creditors have been ignored long enough and they want you to know they mean business, they will place a lien against the largest asset you have, which is most likely your house. In the event a lien is placed on your home, your actions will be severely limited. Taking out a second mortgage or a home equity loan will surely be off the table.

If you're thinking of selling your home, the lien needs to be paid off in full by the closing date, or use the proceeds of the sale. 

Common liens

There isn't only one type of lien creditors can place on you. Here are three more common types of liens.

Mechanics lien: these arise when general contractors work on your home, or repair man, or any labor with skilled crafts. They may place a mechanics lien on your home as insurance to make sure they get paid.

Judgment lien: if you are in court for any reason, and lose the lawsuit, the wedding party can file a judgment lien against your home until the payment is collected. These are usually imposed by lawyers if you neglect to pay your lawyer bills.

Tax lien: neglecting to pay your federal, state, or county taxes results in the government placing a tax lien on your home.

The best thing you can do for yourself if you have a lien is get that taken care of as quickly as possible. You do this by talking to the lienholder and negotiate the payment. 

If you feel the lien is not warranted, you can file a lawsuit to have the court order the lien removed. Of course it will be under intense investigation, so you must prove the debt has been paid, or you never owed anything to begin with.

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