Can a Creditor Take My Home With a Judgment?

••• new home image by Shannon Workman from

An unsecured creditor lacks the legal right, initially, to seize your property, when you fail to pay off your debts, because you were not contractually obliged to provide collateral when you incurred them. Unsecured creditors can, however, use a court judgment to claim your property as collateral -- giving creditors the legal right to seize your home if you do not pay off the judgment.

How It Works

An unsecured creditor cannot seize your home without a valid lien. A lien requires the creditor to obtain a judgment against you by suing you in your local court and winning the suit. It then uses the resulting civil judgment to file a claim against your property with the Land Records office in your county. Once filed, the judgment lien attaches to all real estate you own in the county.

Title Restriction

The lien creates a title restriction on your mortgage title. This title restriction prevents you from refinancing your home before you pay off the judgment. Although it is possible to transfer ownership of your home to another individual without first paying your creditor, if the new owner plans to finance the property, it must have a clear title. In this way, the judgment lien forces you to pay off your debt if you want to sell your home.

Judgment Lien Foreclosure

Any unpaid lien holder has the legal right to foreclose on your home -- including previously unsecured creditors. Judgment lien foreclosure is uncommon due to the fact that upon seizing the home, your creditor must pay off any other liens the property carries that were recorded prior to its own lien. After doing so, the creditor must sell the home for enough money to cover not only your debt, but its foreclosure costs and the amount it paid the other lien holders. This process is time-consuming and not an efficient use of most judgment creditors’ time and resources.

Lien Expiration

The creditor’s judgment -- and the lien it created -- will expire after the statute of limitations for enforcement in your state passes. While the creditor has the right to renew its judgment, it must re-file any previous liens it held against your property. If other creditors filed liens after the original judgment lien, this leaves the creditor with even more debt to pay off before it can legally seize your home -- making a judgment lien foreclosure even less likely.

Releasing the Lien

You can release your creditor’s judgment lien and extinguish its security interest in your home by paying off the judgment in full or returning to court and successfully contesting the judgment. If the judgment is paid or overturned, the creditor has no choice but to release its claim on your property and send you a written notice of lien release.


About the Author

Ciele Edwards holds a Bachelor of Arts in English and has been a consumer advocate and credit specialist for more than 10 years. She currently works in the real-estate industry as a consumer credit and debt specialist. Edwards has experience working with collections, liens, judgments, bankruptcies, loans and credit law.

Photo Credits