Can Collection Agency Put a Lien on Your House or Car?

A lien could cost you your home.

If you've ever had an experience with a collection agency, you know that their primary method of getting debtors to pay is to make incessant phone calls and send dunning letter after dunning letter through the mail. Debt collectors, however, are not limited to these annoying yet harmless debt recovery methods. Collection agencies also have the right to sue you in court and, if they win, put a lien on your house, car or other property.

Debt Collection Liens on Your House or Car

After winning a lawsuit against you, the court awards the debt collector a civil judgment. State laws vary, but collectors must generally file this judgment in the land records office in your county or with the Secretary of State's office. This creates a lien against your home. The lien prevents you from selling your house without

paying off the judgment. A bill collector's right to attach liens isn't limited to the house you live in. Collectors can also attach liens to vacant land, vacation homes and vehicles.

Read More: What Happens If a Collection Agency Sues You and Wins?

Foreclosure or Repossession By a Collection Agency 

A lien gives the debt collector the right to foreclose on your  home or respossess your car. The company then sells the asset and applies the proceeds to your debt. The good news here is that home foreclosures by collection agencies are a rare bird. Most people owe a mortgage on their home and the property may carry other liens as well. Because liens must be paid in the order they are filed, a collection agency doesn't stand a good chance of recovering its debt by foreclosing on your home. Foreclosure isn't cheap, and there is no guarantee that the collector could sell your home for enough money to make the foreclosure worthwhile. The same is true when it comes to repossessing your vehicle. In general, foreclosing on a house or repossessing a car is more trouble for a debt collector than its worth.

Read More: Can a Collection Agency Take My House?

If you own your home or car outright, however, and neither carries outstanding liens, you're in far more

Selling your home helps collectors recover your debt.

danger of the collection agency seizing the asset. That danger increases if the debt you owe is particularly high. As a rule, the higher your debt is, the more likely you are to face a collection lawsuit and possible foreclosure or repossession.

How Long Does a Collection Agency Lien Last? 

Collection agency judgment liens don't remain attached to your home or car forever. Each state has its own regulations regarding the length of time that a judgment is valid. Once its judgment expires, a collection agency's lien expires as well.

Read More: Statute of Limitations for a Collection Agency Judgment Lien

Unfortunately, waiting out a collection lien isn't a short process. Most states permit judgments liens to remain in effect for ten years. If the judgment isn't paid off within that ten-year period, the creditor can renew its judgment. Renewing the judgment, however, doesn't automatically renew the lien. If the lien isn't renewed, it expires and must be removed--even if the judgment itself was renewed and is still valid.

Odds are a collection agency won't remove an expired lien on its own. It's usually up to you to prove that the lien is no longer valid and that the land records office in your county must remove it. Once the lien is no longer attached to your house or car, you can sell them without being forced to apply the sale proceeds to your collection debt.