A lien is a legal right granted by the owner of property, by a law or otherwise acquired by a creditor. A lien serves to guarantee an underlying obligation, such as the repayment of a loan. If the underlying obligation is not satisfied, the creditor may be able to seize the asset that is the subject of the lien. In layman’s terms, it means that someone else, person or company, has a right to at least a portion of your property should you default on an agreement. If that property is no longer available, the creditor may get a judgment for the amount owed and place a lien on your credit report. A lien can severely hurt your creditscore. A common type of lien that has effected many of our client’s credit reports is a tax lien but there are others.
The most common are mechanic’s liens, judgment liens and tax liens.
Mechanic’s Lien: When general contractors build your home—or repairmen, carpenters, plumbers or painters work on your home—they may file a mechanic’s lien on the property as insurance to make sure they’re paid. If a mechanic repairs your vehicle and you don’t pay for his services, he can file a mechanic’s lien against you.
Judgment Lien: If you have lost a court case and there was a judgment against you, the winning party of the lawsuit can file a judgment lien against you until the payment is collected. This type of lien is also sometimes imposed by an attorney if you do not pay your bill for legal services. Additionally, a common judgment lien is filed if you are evicted until the amount owed is collected by the landlord.
Tax Lien: If you do not pay your federal, state or county taxes, the government may file a tax lien on your home.
Can I get a lien removed from my credit report?
Yes, you can! There are many completely legal ways to get a lien removed from your credit reports. Many people are not aware that in 2011 and 2012 the IRS offered a Fresh Start program where under certain circumstances and agreements they would withdraw a tax lien. This might be something you would want to look into if the type of lien you have on your credit report is a tax lien. The statute says that they have 30 days to release the tax lien once they have agreed to do so. See Internal Revenue Code 6325. Unfortunately, they often overlook it and won’t release the tax lien without extra pressure from your end. It isn’t supposed to work that way but the IRS doesn’t have a very good reputation do they? When the Certificate of Release gets filed in the courthouse where the lien was originally filed, the hope is that they will also contact the three major credit reporting agencies. Ultimately it is up to you to make sure this process is completely correctly so that you can stop the lien was affecting your credit score. Other types of liens are much easier to get removed. Contact us for a free evaluation of your credit report.