Creditors Use Liens Against Property to Collect What They are Owed

Creditors Use Liens Against Property to Collect What They are Owed

Richard Fonfrias, J.D.
Chicago’s Financial Rescue & Bankruptcy Lawyer
Fonfrias Law Group, LLC


A lien is a security interest in property that is used to secure payment of a debt. For example, a mortgage is a lien against your home. If you don’t pay your mortgage, the lender has the legal right to foreclose and sell your home to pay the amount you owe.

Another example of a lien is a car loan. If you don’t pay your loan, the lender has the legal right to seize and sell your vehicle to pay the amount you owe.

In most cases, a lien is public record and filed with the county recorder, in the case of real estate. For other types of property — such as a car, boat, or computer — a lien might be filed with the secretary of state.

A Lender’s Lien Secures Your Property

If you want to sell or refinance your property, the first thing the lender does is check for liens against your property. If a lien exists, then you don’t have clear title to the property. So before you can sell or refinance your property, you must pay off the lien or make it part of the new transaction. Creditors use liens as a way of guaranteeing payment of the money they are owed.

A Lender Can Collect On A Lien, if Necessary

In most cases, creditors have the legal right to sell the property to pay off their lien. For real estate, this is usually done through a foreclosure and sale. However, if the lien is not the first mortgage on your property, then the mortgage would have to be paid off before the creditor’s lien is paid.

Most creditors will not force the property sale for a lesser lien because the creditor would then have to make the mortgage payments or lose the property. Instead, creditors usually wait until the property is sold, and the seller uses money from the sale to pay off the lien.

Before you make any decisions about your finances, I encourage you to call me. I am an experienced Chicago BK lawyer who specializes in financial help for businesses and individuals including IRS debt help, foreclosure avoidance and bankruptcy. I’ll give you the facts, look over your situation, and answer your questions. Then you’ll be able to make an informed, intelligent decision. And I offer this information to you without charge. If you would like to speak in confidence to a bankruptcy attorney in the Chicago area, please give me a call.