Property liens are legal claims against property granted by a court to a creditor when a debtor doesn't pay their debts. Liens are filed with the county office and sent to the property owner advising them of repossession of the asset(s).
If you owe money for most other debts like credit cards and medical bills, you (usually) did not sign a security agreement. So, the creditors cannot seize your home to pay the debt. But, if you want to sell your home and creditors have filed judgments for unpaid debts, you may need to pay those debts before the sale.
Debt collectors can only take money from your paycheck, bank account, or benefits – this is known as wage garnishment. If creditors have already sued you and a court entered a judgment against you for the amount of money you owe, the creditor can take money from your accounts to put towards the debt you owe.
If a creditor puts a lien on your property, you may make an offer to settle the amount for less than you owe. As part of the negotiations, get the creditor to release the lien. Consider hiring a debt settlement lawyer to help you if you need help in the negotiations.
A property tax lien entitles the government to recover its dues by foreclosing on your home if you don't pay your property taxes. Property tax liens take precedence over mortgage liens, so not paying your property taxes may mean you and your lender lose the property.
Real property includes things like your home or land. Though creditors can legally seize real and personal property that isn't covered by an exemption, this isn't common because it can be costly for creditors. It's more common for creditors to use wage garnishment or a bank account levy.
It may sound extreme, but lenders — including credit card issuers — could even come after your home to settle your debts. The good news? While credit card issuers can technically pursue foreclosure of your home for unpaid debt, experts say it's rare.
Bank accounts solely for government benefits
Federal law ensures that creditors cannot touch certain federal benefits, such as Social Security funds and veterans' benefits. If you're receiving these benefits, they would be exempt from garnishment.
The bottom line. While debt collectors may not automatically sue over a $3,000 credit card debt, they have the right to pursue legal action if they believe it's a viable option.
In most cases, a lien cannot be put on your home for an outstanding debt. However, there are a few exceptions where a creditor can force the sale of your home: Federal, state, counties, and municipalities attempting to collect on past due property taxes.
You Will Have Ongoing Damage To Your Credit
They can also take different actions that can make the situation even worse. Some may report immediately, while others may sell your debt to third-party collection agencies, who will assuredly file to obtain a judgment against you in court.
To take your home, there must be a legal judgment against you. Lenders must obtain a judgment before any action can be taken. This means that the credit card company must file a lawsuit against you and win in court before they can take any property.
Filing fees and other related costs
The cost of filing this document can range from $5 to $20. If the lien is a mortgage lien, you may have to pay a reconveyance fee to the lender to release the lien. This fee can range from $100 to $300.
A debt collector can't just knock on your door, kick you out, and take your home. But if you fail to pay your bills, they can begin the foreclosure process in order to eventually take away your property.
Your Social Security benefits can't be garnished for credit card debt or for nonpayment of a private mortgage or car loan. Section 207 of the Social Security Act spells that out.
A levy allows the creditor to take funds directly from a bank account to satisfy unpaid debts or taxes. In most cases, levies are permitted only by court order as part of a lawsuit judgment. However, certain government agencies, including the Internal Revenue Service, can levy a bank account without a court order.
And if you lose the lawsuit, it could result in a judgment that includes liens on your property or garnishing your wages. So, yes, credit card companies can sue you, and if pushed into extreme circumstances, they will.
If you own a home, and have fallen behind on your credit cards or other unsecured debts you may be worried about what these creditors can do to collect on the debt. In many states, including California, unsecured creditors can become secured creditors and place a lien on your home.
Undiscovered liens can result in high fines and even foreclosure on the home you worked so hard to obtain. Creditors should make all possible attempts to notify property owners of liens placed on their property but some liens can still go unnoticed so homeowners must take steps to protect themselves.
An irrevocable trust can effectively protect your real estate from creditors. Still, depending on your needs, you cannot “undo” the trust once you have executed it, which can be problematic.
The following kinds of personal property are exempt from debt collection and cannot be seized: Household goods, like furniture, clothing, and appliances. Medical equipment, such as a wheelchair.
Can a bank take property that is paid off? Yes, but it's unlikely. Some reasons are fraud, chain of title issues, existing liens that were never released.