Collection methods vary depending upon the company collecting, but most fundamental set tactics include calls and letters informing an individual of the debt and requesting that he make a payment. Should the debtor don’t do so in a reasonable time period, the lender may require more drastic action to recoup the debt, such as recording a property lien against the debtor’s home.
Property liens set by creditors are called judgment liens. In order to get a judgment lien, a creditor must have a legitimate court ruling on what to base its request. A court ruling is obtained by A creditor from winning suing the debtor. The court will subsequently award a certificate of judgment to the lender, which it could file with the property records office in the county in which the consumer’s home can be found to formally record the lien.
Even if the debt is legitimate, the lender may only acquire a judgment lien by suing the debtor over the time limitation given by the debtor’s state of residence. This statute of limitations protects users from suits and following land exemptions debts too old to lawfully impose. If a creditor files a suit following the permitted time period in the debtor’s condition, the debtor may contest the litigation on these grounds and have it dismissed. MSN Money cautions that creditors could still file lawsuits following the statute of limitations has expired, even though these tactics are prohibited.
In some cases, a lender will acquire a suit against someone without knowing whether or not he owns some property that the creditor may place a lien against. Should this happen, the lender may ask a court order requiring the debtor to appear in court and disclose his available assets so that the creditor may enforce its ruling.
After a creditor documents a property lien, then the land lien remains in effect until the person pays off the debt to the lender or until the judgment on which the lien is based expires. Like the statute of limitations for collecting debts, the statute of limitations for enforcing decisions varies from state. Judgments, nevertheless, are renewable. California, by way of instance, includes a 10-year statute of limitations during which a creditor may enforce its ruling. If it Is Not Able to do this during the 10-year Time Period, the creditor may renew the judgment–and the land lien–for another 10-year period
After a creditor becomes a lien holder, its debt is secured by the house it records a lien against. If the debtor still neglects to settle the debt, the lender reserves the right to request a writ of execution in the court and then foreclose on the property. Provided the lender uses the proceeds from the foreclosure sale to pay off some previously recorded liens against the home, it may keep any extra proceeds.