What Is the Difference Between a Lien and a Levy?
Liens and levies are two common legal tools for collecting a debt. How and when they’re used depends on the particular circumstances of the debt owed, but what are these circumstances, and what is the difference between the two? Read on to learn more about liens and levies.
What Is a Lien?
A lien is a legal claim on property used as collateral or security for a loan. Essentially, a lien is a note attached to your personal property that indicates that a creditor believes you owe them money, and they intend to collect on the debt before they allow the property to be sold.
If a property you own has a lien on it and you sell it, any proceeds from the sale must first go to satisfy the lien before you receive anything. There are many different types of property liens, including:
- Mortgage liens – Mortgage liens are one of the most common forms of a lien. They are used to allow a bank or mortgage company to legally seize the mortgaged property, usually a home, to satisfy your debt if you fail to make payments on it.
- HOA liens – If you live in an area with a Homeowner’s Association but fail to make the necessary payments to the HOA, they can place a lien on your home to collect the dues once it is sold.
- Mechanic’s liens – If you have repairs done on your home and don’t pay the person who completed the repairs, such as a roofer or contractor, they can place a mechanic’s lien on your home to collect on the debt.
- Judgment liens – If you are named in a lawsuit by a creditor and a judgment is placed against you, the court can place a lien on your property to collect the debt owed.
What Is a Levy?
A levy is similar to a lien in that it’s a tool used to collect a debt. The difference between a lien and a levy is that a lien is a claim on debt owed for security, whereas a levy is actually seizing your property to satisfy the debt. Levies are a more aggressive debt collection method, but it can take more time and resources to collect on a debt than a lien.
A levy is usually obtained with a writ of execution and allows creditors to seize tangible property, like cars or homes, or intangible property, such as wages, bank accounts, or investments.
How Can a Lien or a Levy Affect You?
If you owe a debt and a creditor places a lien on your property, you will have to satisfy the debt before you can legally sell the property. If a creditor files suit against you for not paying a debt and obtains a judgment against you, they may be able to get a writ of execution that allows them to levy, or collect, your personal property to satisfy the debt.
Can I Get Out of a Levy or Lien?
Yes, but only under certain conditions, namely, paying off the debt owed. You can also file for bankruptcy, set up a payment arrangement with the creditor, ask for an offer or compromise to pay part of the debt to satisfy the creditor, or in some cases, file an appeal or ask a judge to remove a lien. Talk to an attorney to find out more about your options.
How an Experienced California Lawyer Can Help
If you need help with a lien or levy, consider talking to a California real estate attorney at Winton Strauss Law Group, P.C. We have over 60 years combined experience helping Californians deal with property liens and tax burdens, and we can put that experience to work for you. Don’t let a lien or levy determine your financial future. Call 415-985-2111 today for a free consultation.