Judgment Liens: What They Are and How They’re Created

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

A lien is a creditor’s legal claim against a debtor’s property to protect the creditor’s interest in case the debtor fails to make a payment or otherwise fulfill an obligation.

A judgment lien is a legal claim granted to the creditor by a court ruling after the creditor files and wins a lawsuit against the debtor. The creditor’s judgment lien may be enforced by having the sheriff seize the debtor’s property and sell it to pay the debtor’s legal obligation.

In practice, the judgment creditor usually perfects (or legally verifies) the judgment and then attempts to get the debtor to pay the judgment voluntarily. If the debtor does not satisfy the judgment voluntarily, then the court can issue a judgment lien against the debtor’s property.

To secure a judgment lien against real property, the creditor usually gets an Abstract of Judgment from the issuing court. The Abstract includes facts about the creditor, debtor and amount of the judgment. The creditor then records the Abstract of Judgment in the county where the debtor owns real property. The debtor usually pays the judgment lien when he sells the real property. As long as the judgment lien remains against the property, the balance due increases by the legal rate of interest on that part of the judgment that remains unpaid.

To secure a judgment lien against personal property, the creditor usually files a notice of judgment lien with the Secretary of State where the debtor lives. The notice includes facts about the creditor, debtor, issuing court, judgment date and amount, and the date that a copy of the notice was sent to the debtor.

A judgment lien secured by personal property is usually placed against accounts receivable, promissory notes, equipment or machinery. Some states exempt certain property such as motor vehicles and retail inventory for sale. The debtor usually pays the judgment lien when he sells the property that secures the lien.

If the debtor does not pay the lien when he sells the property, then the property still serves as security for the lien in the hands of the new owner.

If you are facing the possibility of a judgment lien, talk to an experienced financial rescue lawyer to find out what your options might be. Whether the judgment lien is large or small, it can cause serious financial problems for you or for your business, and can adversely affect your credit rating. In Illinois, Chicago bankruptcy lawyer can assist you in dealing with judgment liens, avoiding potential judgments, foreclosure defence, Illinois credit repair and bankruptcy.