Judgement liens vs. property liens

| Apr 26, 2021 | Real Estate |

Georgia citizens who owe money to a creditor in default on their payments may be sued for the balance owed. In the event that a court does rule against you, it will provide your creditor with a judgment lien. A judgment lien is commonly mistaken for a property lien. However, they are very different.

What is a property lien?

Real estate law defines a property lien as a voluntary lien permitted by a debtor. These are most common for things like vehicles and homes. The lender agrees to give you the money to purchase the home or vehicle. However, in exchange, you provide a property lien wherein the lender may foreclose on the property or repossess a vehicle in the event that you default on your loan.

What is a judgement lien?

A judgment lien, on the other hand, is an involuntary lien against your property. Judgment liens are awarded by a court of law without the actual consent of the debtor. These types of liens are used when a person is in debt to another and when he or she does not have a property lien.

For example, let’s assume that a debtor borrowed money to pay for a vehicle in the form of an unsecured loan. Since there is no property lien with an unsecured loan, the creditor will need to file for a judgment lien with the court to recuperate the money in the event that the debtor does not pay what he or she owes. If awarded the judgment lien, the creditor will be awarded the proceeds from the sale of the vehicle to pay off the debt. If any additional debt is owed, the debtor is still legally obligated to pay for it.

Many people will deal with a property lien at some point throughout their lives as this is a very common type of collateral agreement. Unfortunately, some people may end up dealing with a judgment lien if their financial situations change and they’re unable to repay the debt that they owe. If one of your creditors has received a judgment lien against you, it’s important to speak to an attorney about your options.

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