The Commonwealth of Virginia and many other states allow creditors to file liens when a debtor is delinquent (late on payments) on debt.
SECURED V UNSECURED DEBTS
A credit card is an unsecured debt because a lender is not able to take any collateral when they provide credit on a card. A home or car with a lien is considered a secured debt. The home or car can be foreclosed on or possessed if payments are not made to the lender.
In order for a creditor to obtain a judgment lien, there are certain procedural hurdles to jump through such as sending a notice to the debtor, proving the debt is valid and filing the suit in the applicable jurisdiction. If the creditor succeeds in obtaining a judgment lien, it can attach the lien to real property owned by the debtor. Judgment liens are generally also good for twenty years.
A few examples of debts that can lead to a judgment lien include credit cards, medical bills, HOA dues, and civil or criminal lawsuits. It should be noted that simply having a debt doesn’t automatically lead to a judgment lien. The creditor must continue the process of filing for the judgment lien with the local general district court.
Further, if the debtor does not own any real property, creditors are unable to attach the lien to any real property. However, the lien may attach to any future property purchased by the debtor.
LIENS AND YOUR PROPERTY
In the end, if a judgment lien attaches to a debtor’s property, the debtor must pay the lien upon sale of the home in order to convey a clear title. The judgment lien is considered a title defect. The lien can either be paid before the sale or at closing with the sale proceeds. Interest will continue to accumulate as the days and years go by so it’s important for the debt to be paid as quickly as possible. Time won’t necessarily help as judgment liens are typically valid for 20 years.
ACT EARLY TO DELINQUENT DEBTS
If you or someone you know needs further assistance with debt negotiations it is best to act quickly. Hanger Law understands that sometimes circumstances beyond your control cause a financial crisis. Speaking with an attorney early can help resolve some of these debts before they become a judgment and creditors attach a lien.
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