When you face financial hardships, one of the things that could happen is that liens could be placed on your property. A lien will prevent you from selling or transferring a property until the lien has been removed.
There are two basic types of liens. A property lien is considered voluntary and can come into play when you finance a large purchase such as a car or a home, and you must put up collateral as part of a contract that promises to repay that debt. This helps reduce the risk a lender faces when lending you the money. If you default on your loan, as part of your credit agreement, a property lien means that you give up your rights to the property if you cannot meet your debt obligations.
A judgment lien comes about as a result of somebody winning a lawsuit against you. Although there are numerous ways to collect on a debt, creditors can use judgment liens as the main way to ensure that you actually pay off a debt. After a creditor wins a judgment against you, they record the lien in the county where your property is and attach the judgment as proof that they are entitled to that lien. Most of the time, the lien must be removed before the property can be sold or transferred to another person.
There are several ways to have a lien released or removed.
You can pay off the debt. When this takes place, the creditor will agree to release the lien.
Ask the courts to remove the lien. This is not automatic and depends on the nature of the property and the circumstances surrounding each case.
Claim the property with the lien should be exempt. In some instances, you may be able to make a case that the property should be exempt from a judgment lien.
File for bankruptcy. Generally considered the last resort, bankruptcy laws will allow you to remove the judgment lien in a bankruptcy court.
Due to the complex nature of these actions, it’s always best to consult with an attorney who will be able to guide you step by step through the entire process and help you determine which route is the best one for you.
Faletti Law Office focuses on family law, tax law, bankruptcy and estate planning for clients in Bloomfield and the surrounding Colorado communities of Arvada, Westminster, Northglenn, Commerce City, Erie, Brighton, Lafayette, Longmont, Firestone, Thornton, Adams County, Jefferson County and beyond.