Collecting on a judgment should always be straightforward. Unfortunately, it is not. Debtors are known to go to great lengths to avoid paying. That’s why creditors and judgment collection agencies have to be ready to use every tool at their disposal – including the lien.

Placing a lien on a debtor’s real property protects the creditor’s right to collect even if the debtor declares bankruptcy or attempts to sell or transfer the property. And because liens are legal documents entered into record by a court, they are recognized nationwide.

More About Liens

Liens are often described as legal instruments that give a creditor ownership interest in a debtor’s property. This is not entirely accurate. A lien does not establish ownership. It establishes a legal right to collect on a debt. That makes a lien more or less a public record indicating that a debtor owes a creditor.

The law gives a lien teeth by not allowing the transfer or sale of assets as a way of evading legal debts. Take your own home, for example. Your lender placed a lien on the property when it gave you a mortgage. Should you decide to sell the house, that lien forces your attorney to pay your outstanding debt to the bank before turning over sale proceeds to you.

A lien also protects creditors in the event of bankruptcy. Let’s say you don’t have the financial resources to pay a judgment entered against you. Your creditor hires judgment collectors who subsequently place a lien on your home. Even if you declare bankruptcy, that lien is not erased. You will still have to make good on the debt should you decide to sell or transfer the home.

Perfecting Lien Rights

Judgment Collectors, a Utah debt collection agency that specializes in judgments, explains that most states require creditors to perfect lien rights, should they choose to use the lien as a collection tool. What does this mean? It means creditors have to do more than just file a lien.

Creditors must also record the judgment in question in the same county as the real property on which the lien will be placed. If Judgment Collectors wanted to place a lien on a Salt Lake County property, despite the original judgment being entered in Davis County, they would have to record the original judgment in Salt Lake.

Once lien rights are perfected, the debtor cannot transfer the title of the property in question without first satisfying the debt. And if they cannot transfer clear title, they will not be able to sell the property or give it away. No one will take it with a lien on it.

Real Property Has Value

Liens are extremely effective as judgment collection tools because they are attached to real property. Unlike a promise to pay out of future income, real property already has value when a lien is placed against it. That value is not dependent on the debtor’s ability to get and hold a job. It is not contingent upon their ability to pay their other debts.

The best judgment collection agencies in the business perfect their lien rights as early as possible in the collection process. It is smart for creditors to do the same. Otherwise, a person attempting to evade collection might be encouraged by an attorney to sell or transfer assets. You essentially have a scenario in which the party willing to move the fastest has the edge.

Whether you are a creditor or debtor, know this: liens are effective collection tools. They link debts to real property for the purposes of not allowing debtors to evade collection.