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Could a collection agency place a lien in a property I'm planning to buy now as my primary home if I have a heloc debt?

Chula Vista, CA |

I had 2 properties foreclosed (underwater) both had a 1st mortgage plus a heloc, the first one was forclosed on 2008 both loans were never refinanced "purchase money", however it been almost 5 years and I continue to receive a heloc statment increasing the amount every month, originaly debt was 73k now is almost 100k I believe the statue of limitations in CA is 4 years but as I said i continue receiving the statment higher every month. I had a 2nd foreclosure (2 years old) which was also my primary residence, on this one I had a heloc that appears in my credit report as "debt settle" and it was transferred to a collection agency, can they place a lien if I buy a new home as primary residence for my family? Thanks for your feedback!!

Attorney Answers 1


First I'll summarize what I think is your factual status and your question.
First Property: Foreclosed in 2008. Heloc on property was foreclosed out. Heloc is a written contractual obligation. The statute of limitations on a written obligation is 4 years from the date of breach. It appears that you are beyond the 4 years (assuming that you did not make any payments in the 4 years time). The Heloc debt on the First Property is likely barred by a statute of limitations defense.
Second Property: Foreclosed in 2010. Heloc on property was foreclosed out. Collection agency now owns the debt. Debt obligation is within the 4 years from date of breach.
Lien on Primary Residence. The only way for the debt collection company to record a lien is to first have a judgment (unless it applied for a prejudgment attachment). Even if it did this you have a homeowner's homestead exemption (amount depends on your age and marital status).
i hope that this helps you think about this issue.

This is a general answer only and you should seek the advice of counsel to address facts specific to your circumstances.

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Thank you Mr Austin, what are the chances that a collection agency woud get a judgment and a put a lien if in case I buy the new home as my primary residence, taking in consideration the heloc debt is $52k and in case they would put a lien what it would happen? would they try to foreclose my new home or the lien would stay on the property and after 4 years the statue of limitations would protect me and the lien would have to be discharged? Thanks again!

Michael Austin Hackard

Michael Austin Hackard


Collection Agency Judgment on Second Property. Collection agencies will pursue you if they think that there is something to get. You really do not have to respond to their questions, whether over the phone or by email. Depending on the state in which you live I would think that a homestead exemption should protect your new equity in your home. This assumes that a lien is not in place at the time of the purchase of your home. If there is a judgment lien it place (there has been a judgment rendered already) in California judgment liens are effective for 10 years and can be renewed. I hope that this helps to clarify your question.

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