What is a house lien?
If you are in trouble with your debt, odds are a creditor or collection agency has threatened you with filing a lien on your home. If you don’t know what a house lien is, though, you have no way of fighting it. Fortunately, there are things you can do.
What to Know about a House Lien
A house lien is really nothing more than a debt that is assigned to an asset. They were originally meant to be a way for creditors to get money that was owed to them from people who were not able to pay them. In order to get one, a creditor has to go in front of a judge and prove that a particular person or company owes them money. If the judge decides that the debt is legitimate, then the lien is filed.
A house lien states that when the asset is sold or transferred, the first profit collected from the sale must go to the lienholder. A common example is a mortgage; when a person sells their house the money from the sale must first go to the mortgage company to pay off the balance on the loan. After the mortgage is paid off, the rest of the money from the sale can go to the homeowner.
In the case of a house lien placed by a credit card company or other lender, the remaining money would then go to pay off the lien. If there isn’t enough money to pay the liens, the lienholders have the option in most states to block the sale of the asset. This means that they can ask a judge to not allow the sale of a home to go through. Because this is often a method of last resort for a company to get their money back, it is common for them to ask for sales to be blocked. It is believed that this provides some motivation for the debtor to pay back the debt.
If you currently have a lien on your property, you have the option to pay it off before attempting to sell your home. Many people prefer to do this rather than go through the entire home selling process just to have it stopped at the end. Debt consolidation might be a good way to pay off the debt in small amounts.