Winning a civil judgment often includes a monetary award of some sort. But actually getting paid is another matter. Just because a court renders a judgment in one party’s favor doesn’t mean the other party is going to immediately pay up. Winning parties, also known as judgment creditors, often need to resort to things like judgment liens to get what they are owed.
A judgment lien is a lien attached to personal property after a judgment debtor fails to pay. Judgment liens are considered tools to be used after less aggressive means of collection have been tried. Fortunately, they are also very motivating collection tools. A judgment debtor slapped with a lien suddenly finds him or herself in a precarious position.
What a Lien Accomplishes
Judgment liens are governed by rules articulated by state law. Therefore, there are some variations among the states. But as a general rule, a judgment lien is a legal instrument that attaches a financial interest to a piece of personal property. Let us use an example from Salt Lake City-based Judgment Collectors to illustrate the point.
Judgment Collectors once worked on a case involving a debtor and a previously hidden airplane hangar. Once the agency discovered the hangar’s existence, they contacted the debtor and made it clear they knew he had the means to pay. Faced with the choice of having a lien attached to his property or making payment arrangements, he chose the latter.
Why? Because having a lien attached to the airplane hangar would have given the judgment creditor a financial interest in that property. The property could not be sold or transferred without the debt being paid. Unfortunately for the debtor, a lien on his property would have reduced its value. Therefore, it was far better to pay up.
Some Liens Transfer
While liens typically prevent the transfer of personal property without payment of the attached debt, some states allow transfers of judgment liens. Washington state is a good example. There, a judgment creditor could file a lien against a debtor’s vacation home. The lien would remain attached for 10 years or until the debt is paid. Should the debtor decide to transfer that vacation home to a child, the lien would transfer along with it.
Although this might seem to benefit the judgment debtor, it really does not. As long as the lien remains attached, the chances of being able to sell the property are slim. No one would want to buy a vacation home with a lien attached to it. Therefore, transfer options are pretty limited.
The Property Seizure Option
Plenty of judgment debtors are motivated by liens to pay up. But there are cases in which a debtor truly does not have the money to pay. Attaching a lien is not going to do any good. Then what? There is always the property seizure option.
In states that allow it, judgment creditors can go back to court to obtain writs of seizure against debtors. A writ of seizure gives a creditor the legal right to seize the property in question, sell it, and settle the debt with the proceeds. This is a more drastic solution than the judgment lien, but it tends to be highly effective.
Sometimes, judgment debtors only need a bit of motivation to pay up. Until such motivation exists, they might not believe their creditors are serious about collecting. Changing that perception could be as easy as filing a lien against a debtor’s personal property. A lien is often enough to get a debtor to find a way to pay what he owes.