Judgment creditors have a variety of tools for collecting what is owed to them. One of those tools is the judgment lien. When attached to high-value property, a judgment lien can all but guarantee a creditor gets paid.
The value of a judgment lien rests in its ‘sticky’ nature. In other words, a judgment lien remains in place until either the debt is satisfied or the judgment is allowed to expire. There is little a debtor can do but settle up or declare bankruptcy.
A Non-Consensual Lien
A judgment lien is classified as non-consensual because it’s not something the debtor approves. The judgment debtor actually has no say in the matter. The only way for a debtor to get out of a judgment lien is to pay his bill.
As a matter of contrast, the lien placed on your home by your mortgage lender is a consensual lien. You agreed to it when you signed the mortgage papers. You still cannot get out of it without paying your mortgage. But that doesn’t change the fact that you agreed to the lien.
What a Lien Actually Does
Judgment Collectors, a Utah collection agency specializing in money judgments, describes the judgment lien as a means of converting an unsecured judgment into a secured debt. The debt is secured by whatever property the lien is attached to. That property cannot be sold, transferred, or otherwise disposed of without addressing the debt in question.
Most judgment liens are attached to real property. Examples include:
- Vacation homes
- Rental properties
- Investment properties
- Leisure properties
More or less any piece of real estate other than the debtor’s primary residence is up for grabs. Judgment Collectors once went after an airplane hangar they found during a property search. As you might imagine, the debtor wasn’t willing to jeopardize the property, so he paid up.
Attaching to Other Assets
Real estate is the preferred asset to hit with a judgment lien because it has so much intrinsic value. But most states allow creditors to go after other assets. Vehicles are a great example. Some states do not allow a creditor to go after a debtor’s primary vehicle, but most allow attaching liens to:
- Boats and RVs
- Planes, hang gliders, etc.
- ATVs and other off road vehicles
States that prohibit creditors from going after primary vehicles do so understanding that a debtor needs their car to get to and from work. But what if he has a classic car or two that are only used seasonally? Classics are considered collectibles and are usually subject to judgment liens.
The Time Element of Judgment Liens
If judgment liens have a downside, it is the time element. Assume that a judgment lien is used because a debtor does not have the financial means to pay right away. He may not have the means to pay for years. Filing a lien prevents the debtor from disposing of an asset that could be used to pay. But payment might still be delayed.
On the other hand, it is not unheard of for debtors to make it seem like they cannot pay even though they can. Once a judgment lien is filed against their property, they suddenly find a way to come up with the money. So liens sometimes result in quick payment.
Regardless, judgment liens are one of the most popular enforcement methods in the judgment collection game. Creditors and collection agencies both understand the value of laying claim to an interest in a debtor’s property. The claim sticks around until the debt is settled.
