Why do liens exist? Simply put, property liens help creditors get paid. Not only will a lien give a creditor rights to your property, but a buyer won't agree to buy the property until you remove the lien, and a lender won't finance it either.
If you're concerned about property liens, you'll want to learn:
Because liens and financial problems go hand in hand, filing for bankruptcy could be part of the solution. To make it easier to learn how bankruptcy works, we've put together a few things you should know about bankruptcy.
Also, our quick ten-question bankruptcy quiz can help you figure out if bankruptcy would help solve your financial problems. Ultimately, a lawyer will be in the best position to advise you about lien issues.
Not all liens arise in the same way. Here are the three primary lien types you might encounter:
For more detail, read about different types of liens.
So why would a creditor want a lien? It is a powerful way to make sure you pay a debt. For instance, most liens will give the creditor the following rights:
Because liens often get paid when selling or refinancing property, many creditors sit back and wait for that day to come. Here's how it works.
Because liens stay with the property, typically, a buyer will do a title search and require the seller to remove any lien discovered before finalizing a sale. Lenders also condition financing on a clean title free of liens. Keep in mind that lien laws, protections, and procedures vary by state.
The easiest way to get rid of a lien is obvious—pay the underlying debt. But that isn't always possible. Here are other options:
If you're worried about liens, you likely have other debt issues. Even if you can't eliminate a lien in bankruptcy, improving your finances by discharging (erasing) qualified debt can free up the funds you need to solve your lien issue.
Bankruptcy is an unusual area of law because it's essentially a qualification process. The laws provide instructions for completing a 50- to 60-page bankruptcy petition, and because all rules apply in every case, you can't skip a step.
The forms and resources below will help you find more information. Also, you can use this list of Chapter 7 and 13 bankruptcy forms to see where this topic falls. And this handy bankruptcy document checklist will help you gather the things you'll need to complete the petition.
More Bankruptcy Information
You'll find fillable, downloadable bankruptcy forms on the U.S. Courts bankruptcy form webpage.
We want to help you find the answers you need. Go to TheBankruptcySite for more easy-to-understand bankruptcy articles, or consider buying a self-help book like The New Bankruptcy by Attorney Cara O'Neill.
We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by consulting with a local bankruptcy lawyer.