What Is a Lien and How Does It Work?

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Did you receive notice that you’ve got a lien against one of your properties?

If so, it’s best you take action. A lien is a type of legal claim that if left unresolved, can lead to serious financial and credit issues down the road.

Understanding how a lien works can help you come up with a plan to get back on track and start repaying debts.

Here’s what it is and how it works so you can take action.

What Is a Lien?

A lien is a type of legal claim used by creditors to recoup the compensation they’ve lost. It’s easiest to think of a lien as a type of backup insurance lenders use to get paid if you fall short on your debts.

Liens can be placed on a piece of property you own or even your business. And since it’s issued to settle a debt, this is one type of legal claim you can’t ignore.

You can do an online UCC search to locate liens in your area.

How Does a Lien Work?

To understand how a lien works, you need to know there are two types: consensual and involuntary.

A consensual lien is one agreed upon by both parties at the beginning of a loan. Typically, a person with bad credit agrees to a consensual lien as a last resort in order to acquire money, a new car, or some other asset that’s financed.

Involuntary liens are legal claims filed by creditors to recoup money. If you become delinquent because you didn’t repay a debt, a creditor can get a court ruling to take money out of your home or business.

How to Get Rid of a Lien

It’s best to get rid of a lien as soon as you can. There are different ways you can go about getting rid of them, although ultimately, it’s going to come down to you paying off your debt.

It’s worth noting that Chapter 7 bankruptcy does not get rid of liens, by the way.

Pay off Your Debt

Did you know the average American has about $90,000 in debt?

Paying back the money you owe is the fastest way to get rid of a lien. If you aren’t flush with cash right now, it could be a good idea to borrow money from family or get a personal loan (if your credit score is high enough).

In the event that the asset with a lien on it has value, such as a car or a home, selling the item could also be an option.


Some creditors are willing to negotiate your debt and settle for 30 to 60% of your balance owed. You must get this in writing, but if they agree, it could be a way to get rid of your lien.


If you believe the lien placed on your home or business is illegitimate, you can fight it. Just know that you may need to hire an attorney.

Most creditors have a legal team at their disposal, and if you go it alone, you’re unlikely to succeed (unless you have solid proof).

Liens and Legal Claim Issues

Liens are a type of legal claim that you’ll want to deal with quickly. They allow creditors to take money from your home or business to recoup unpaid debts.

Ultimately, paying off your debt is how you’ll get rid of them. But in some cases, you may be able to settle for less or dispute the lien.

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