What Happens When a Creditor Elects to Put a Lien on a House?

As a bankruptcy attorney I see the toll debt can take on a family every day. It's something that my clients are constantly dealing with. Now that foreclosure rates are at an all time high, saving your family home has probably moved up to number one on your to-do list. What many people don't realzie however is that foreclosure from mortgage isn't the only threat you can face. You could be in just as much danger of losing your home if someone puts a lien on it.

This is, undoubtedly, one of the scariest tactics that a creditor can use—after all, having something like your home in danger, which you've worked your whole life to have and keep, is a terrible feeling. Now, not only do you need help with the original debt, but you could be facing the need for protection from foreclosure.

If a creditor receives a judgment for a debt, for instance an old credit card bill, they will be able to put a lien on your house. If you call the collection agency about it, they may not immediately realize they have a lien. Like with a mortgage, the lien-holder can then foreclose on your home.

Even if the creditor decides they don't want to foreclose at that time, the fact that a lien is in place makes it impossible for you to sell your home (the title company will do a search of public record for any judgments or attachments against the property before closing).

So what do you should residents do when find out you have a lien on your home? There are two main ways to get rid of it. One is to "satisfy the judgment," (meaning you pay the creditor back in full, plus interest). Of course, chances are you would have already done that if you could have.

The other way can be a little more complicated. There is a section of bankruptcy law which can allow you to get rid of a lien on your property. This is an exceptionally complicated process sometimes known as "lien-stripping,", and should only be trusted to the most skilled and experienced of bankruptcy attorneys.

Why? Well, you literally have your home at stake. If there's a mistake made in the lien-stripping process, then not only could you lose your home, but your bankruptcy case could be dismissed (leaving you worse off than when you started).

Don't take that chance. Find out what your options are to keep your home. Make sure you get the best bankruptcy attorney to handle your case.


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James Brown is a personal bankruptcy attorney in St. Louis, Missouri. He has filed over 30,000 bankruptcy cases and published many books and articles. You can request his free Missouri and Illinois bankruptcy guide for the best tips on how to prepare for your bankruptcy and find a great bankruptcy attorney.