How Do I Put a Lien on a Judgment Debtor’s Property?
Placing a judgment lien on a debtor’s personal property is one way to motivate that person to pay what he owes. The question for creditors is how to go about it. Fortunately, placing a judgment lien is a pretty straightforward process. And in a small number of states, it does not require anything at all from the creditor.
More About the Judgment Lien
A judgment lien is an official document establishing a financial interest in a debtor’s property. Think of it in terms of your mortgage. When you signed your mortgage, the bank also filed a lien against your property. That lien establishes the bank’s financial interest in your home. Should you choose to sell, proceeds from the sale would be forwarded to the bank to pay off your loan.
A judgment lien works in a similar fashion. Its value is equal to the monetary award the debtor is compelled to pay. A judgment lien can be enforced in one of two ways, depending on state law:
- No Sale – In some states, a judgment lien is identical to a mortgage. The attached property cannot be sold, transferred, or otherwise disposed of without settling the debt.
- Transfer – Other states allow attached properties to be sold, with the lien being transferred along with the deed. Buyers typically do not want to get involved with attached properties. So even in these states, a judgment lien is motivation to settle before selling an attached property.
It goes without saying that properties have to be worth quite a bit for judgment liens to be effective. Perhaps that’s why most judgment liens are attached to real property. Whether it is a vacation home, a rental property, or a piece of vacant land the debtor hopes to build his retirement home on someday, a judgment lien is like a weight on the property owner’s back.
Filing a Judgment Lien
Most states require the judgment creditors file judgment liens on a case-by-case basis. Once a judgment has been rendered against a debtor, the creditor can then start looking at property that might be leveraged for payment.
Judgment Collectors, a specialized collection agency based in Salt Lake City, once worked on a case involving a piece of property in a neighboring county. The debtor in question had not previously disclosed said property. But once Judgment Collectors founded, it became abundantly clear to the debtor that a judgment lien could be placed on it. The property could even have been subject to a writ of seizure. Needless to say, the debtor paid up.
In order to file a judgment lien, the judgment itself must first be recorded by the court clerk. Recording is instantaneous in some states. In others, it could take a couple of days. But once the judgment is recorded, the creditor can file a judgment lien with the court clerk.
Approval is usually a simple administrative task. The clerk looks over the filing to make sure everything is an order. If necessary, she also verifies that the debtor owns the property listed in the application. Approval is given as long as all of the creditor’s ducks are in a row.
Automatic Judgment Liens
A small number of states utilize automatic liens. In other words, once a money judgment is awarded, a lien is placed on all the real property the debtor owns in that county. A creditor needs to do nothing.
Judgment liens can be effective tools in convincing debtors to pay. They are definitely worth a look at if a creditor and debtor cannot work out an amicable payment plan.
