A lien on your property can be created even if you’ve just made a life-altering decision to buy your dream home or have been mulling over whether or not to buy the car that’s been on your heart’s desire for a long time.

If you fail to repay your debt, a lien gives your creditors the legal authority to seize your property. Until you pay off your debt completely, lenders place liens on the assets you provide as collateral. A lender’s investment is protected by this, but the public is made aware that you owe them money.

It is possible for liens to be either voluntary (agreed upon) or involuntary (forced). One type of voluntary lien is that which is simply attached to a loan, such as with a mortgage or other loan security. If you fail to pay your bills on time, your creditors may impose an involuntary lien on your property. An example of an involuntary lien is shown here, as is an example of a way to remove it.

Liens voluntarily placed on property

1.      Mortgage Lien

By signing the loan agreement and accepting the lender’s claim on your property, you commit to pay back the loan.

It’s possible to find out if your property is encumbered by a lien at your county clerk’s office, the recorder of deeds office, and/or the county recorder. A title company can also do a title search for you. Amy Loftsgordon, a Colorado foreclosure lawyer, says that you can also check online in some areas.

When you pay off your mortgage, the lien is released by the lender. However, if you fail to make your monthly mortgage payments, the lender has the right to foreclose on your home.

2.      Lien on a Motor Vehicle

It is common for people to take out a loan when they cannot afford to pay for a car outright. If you don’t pay your automobile loan on time, the lender has the right to repossess the vehicle.

Your vehicle identification number is all you need to check if there is a lien on your vehicle (VIN).

With the National Motor Vehicle Title Information System, “A lot of states will allow you to conduct a check online,” Loftsgordon explains. Another option is to visit your local DMV and request a record search.

Your loan is released from the lender’s hands once you’ve paid it off in full. For those in danger of losing their vehicles, there is hope. Certain categories of property are free from taxation in all states, regardless of their location. You can maintain your exempt property even if you are being sued for it.

Loftsgordon advises, “You must determine how much is exempt and how to claim the exemption.” “Exemptions aren’t given to everyone. The creditor must be notified of your desire to collect on the debt.”

Liens that are imposed on someone without their consent

1. Lien for Unpaid Taxes

By failing to pay your taxes and placing a lien on your property, the Internal Revenue Service has the power to seize all of your assets. A federal tax lien is what you’re dealing with here.

You shouldn’t be surprised by a federal tax lien. What they call a Notice and Demand for Payment tells you how much you owe and how to pay it. Your creditors will receive a Notice of Federal Tax Lien if you don’t pay your taxes on time, and this notice will inform them of this legal right. A federal tax lien can be appealed. After you’ve paid off your obligation in full, the IRS will remove the lien from your property within 30 days.

2. The Judgment Lien

In the event that you are sued by a creditor for money you owe, you could be charged with a judgement lien from any type of lender, be it a medical or credit card company. Lenders might take possession of your home and sell it to recoup their losses in court. As a rule, judgement liens are used by lenders to collect money owed to them. As an example, if your property is worth $100,000 and you still owe $60,000 on your mortgage, you would have $40,000 in equity in your home. In some places, a creditor may be able to take that money from you if you sell your home.

When it comes to the litigation, Loftsgordon says you’ll be aware of it because of the judgement. “You’ll have a general concept of where to look.”

Additionally, in most jurisdictions you can apply to have the judgement lien lifted if you can show that the proper legal procedures were not observed. The procedure will be difficult, but it is doable. To get rid of the lien, you could file for bankruptcy and have it erased from your credit report, which could have a negative impact.

3. Lien for payment from the mechanic.

All parties involved in the construction process might be lien holders: subcontractors, suppliers, and contractors. If you don’t pay for the services provided by contractors, such as maintenance work or building on your property, they might place a lien on those services. The contractor must notify you if they intend to file a lien in the majority of states, says Loftsgordon.

California bankruptcy attorney Cara O’Neill tells MailOnline that “the creditor would likely need to comply with state notice requirements and record paperwork in the right government office in order to complete a legal mechanic’s lien.” The lienholder must file a lien foreclosure lawsuit to prevent the mechanic’s lien from being voided if the lien is only valid for a limited period of time.

If you are unable to reach an agreement, the contractor may proceed to collect the judgement. You can get rid of this encumbrance by making good on your debt. Once you’ve paid, the lienholder is responsible for removing the lien. It’s not going away on its own. Negotiate with the contractor if you believe you have a genuine justification for not paying (for example, if the work wasn’t done) (invoices, photos, etc.) It may be necessary to take the matter to court if that doesn’t work.

Bankruptcy may also allow you to remove a lien, O’Neill explains. It can be avoided entirely if the bankruptcy case is filed in a timely manner by the debtor.

Lien holders can be offered partial payback as an alternative option of removing their lien. A lump sum payment of, example, half of your debt is not widely known, according to Loftsgordon.

Involuntary Liens of a Different Kind

If you don’t pay your monthly dues, your homeowners’ or condominium organization may file a lien against your house. However, you are forewarned of this in advance by the organization. If you don’t pay your child support, the court might potentially put a lien on your property.