How to Protect Yourself From Creditor Liens

How to Protect Yourself From Creditor Liens
••• Hemera Technologies/ Images

If you fail to pay a debt you owe, your creditor can file a lawsuit against you. Should the creditor win the lawsuit, it may have the option to collect the amount owed through wage garnishment, a bank account levy or a property lien. If a lien is placed against your property, your creditor will be paid when and if the property is sold. In some states, however, your creditor may be able to force you to sell the property. You can take steps to protect yourself from creditor liens.

Research your state laws. Each state’s regulations regarding liens differ. All states will permit liens for government debts, but some states place restrictions on the legal methods a private creditor may use to collect from you.

Check the statute of limitations on each of your overdue debts. The statute of limitations dictates the amount of time a creditor has to legally collect a debt from you and varies by state. Should the creditor file a lawsuit against you, an expired statute of limitations provides you with an impervious defense and protects you from a lien.

Respond to any court summons you receive regarding an unpaid debt and appear in court to defend yourself. If you do not respond, the creditor will win its case by default. Showing up in court and forcing a creditor to prove that you owe the debt makes it less likely for a judgment and subsequent property lien to be levied against you.

Work out a payment plan with your creditors. A creditor is much less likely to seek a lien against your property if you are making regular payments on the debt you owe.

Transfer major assets, such as a home or car, into the name of someone you trust if you are in danger of being sued. A creditor can only legally place a lien against property that belongs to you. If the property has been transferred to someone else, a lien is no longer possible. However, the transfer must occur before a lawsuit is filed.

File for bankruptcy. A bankruptcy court will then assess your income and assets to determine if you can afford to repay your debts. If you can, a repayment plan will be assigned to you. If you cannot, the court will liquidate your assets, pay off as much of your debt as possible and discharge the rest. After you have fulfilled the terms of your bankruptcy, you will no longer legally owe the majority of your creditors and a lien cannot be filed against your property.


  • Property liens are not permanent. Should a creditor place a lien on your property, that lien will only be valid for a set period of time, depending on your state’s laws.

    You can return to court and attempt to vacate a judgment that has resulted in a property lien. If you win, the lien will be removed.


  • The government is not required to take you to court and secure a judgment before placing a lien against your property.

    Some debts, such as child support, cannot be discharged via bankruptcy. Thus a lien may still be placed on your property after a bankruptcy is complete.

    Attempting to transfer assets to another person after a lawsuit is filed against you may be ineffective and could result in legal consequences.