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You know that if you don’t pay your mortgage and go into default, the financial institution has a right to your house. This is because it has a lien on it. But other creditors or companies can also place liens on your home.
There are several different types of liens, but they all work the same. Your property is held as collateral until the debt is paid. Here is all about liens and how to avoid them.
Liens Allow Creditors to Seize Assets
Liens allow creditors to seize and sell your assets if debts aren’t repaid. When the creditor has a lien against you, that means it has a legal claim to your property as collateral until you pay your obligation. Courts can place liens on your assets, such as property and bank accounts. You cannot sell your property without the lien-holder’s consent. Or, if you are able to sell your property, you must pay the lien-holder out of the proceeds.
