Archive for the ‘Liens’ Category

What is a Lien?

There are many different kinds of liens, but the basic definition of a general lien is that it’s a legal claim against something you own and is used to secure a loan.

(when I was fighting with collection agencies, they were always threatening to get a lien against me. Even though I got rid of the debt before they could get a lien against me, it was scary to see these notices in the mail.)

If you have not completely paid off a debt, then the lien is not released and you are not able to sell property.  Liens are used to protect both consumers and lenders, and may work in your favor depending on what the situation is.

Example of a General Lien

A good example of a general lien is a car loan.  The bank or financial institution lending you the money places a lien against the car you’ve just bought.  Legally, they still own the car, even though you are responsible for paying the monthly payment until it is paid in full. You don’t truly “own” the car until the lien has been satisfied or “released.”

If you decide you want to sell the car, and the debt is still not paid, the lien prevents you from selling the car.  If you are delinquent on any of the payments, the bank can repossess or seize the vehicle until you bring the payments up to date.

Defaulting on a loan enables the lien holder (the bank) to garnish your wages.  It will be listed on your credit report as a bad debt and the lien will still be held against you.  The only other way you can have the lien removed is to file bankruptcy, which is an extreme measure.

Some types of liens actually protect you as a consumer.  Say you’ve hired a contractor to install new kitchen cabinets.  You agree on a price and pay him ½ of the money upfront.  The contractor works for a few days, then doesn’t show up for the job and doesn’t answer the phone number you were given.

You are allowed by law to file a Mechanic’s or Contractor’s Lien.  This is a legal document that places a hold on any funds in his business checking accounts.  It becomes a garnishment against his collection of any other funds from other jobs.  Your claim must be satisfied before the lien against him is released.

Finally, the Internal Revenue Service can place a Tax Lien against any taxpayer who has not paid their income tax owed.  The government will freeze your funds in any checking or saving account, and will not release the funds until the debt is paid.

Some creditors get over zealous when placing a lien against you. Not only does this put a lien against your property, but it also shows up on your credit report.

* We were so impressed with Lexington Law that we decided to become a sponsor and put up this website.

A lien on credit report will stop you from getting any new credit such as a new mortgage. You can get immediate help to dispute questionable liens from a credit repair attorney like we did. Get a FREE credit consultation with credit repair experts by calling 1-800-298-4297

Tags:
Posted in Liens | No Comments »

How To Remove a Lien From Your Credit Report

If you have a questionable or unverifiable lien on your credit report, you may be asking yourself: How can I remove a lien from my credit report?

How you go about doing this depends on what type of lien is listed on your credit report.   If it is a General Lien, such as a car loan, the lien is removed when the loan is paid off in full.  Unless you dispute your credit report first, it is up to the bank or other lender to determine when it is removed.

If after a reasonable amount of time the lien still has not been deleted, you will have to write a letter to the credit bureau.  Its good to have a copy of the last payment made or other information confirming the debt has been paid, such as a payoff letter or canceled check.

A lien from the IRS stays on your credit report until you pay off the taxes owed, which why the lien was placed in the first place.  If you can prove a financial hardship or have paid enough to satisfy the principal amount, the IRS may decide to forgive the balance.  There are other options, but there is no magic bullet.  Accurate liens are simply not removable until the debt has been paid off.

However, many times a lien is just not accurate or verifiable. Banks and credit bureaus make mistakes and often report inaccurate information. There are methods to legally and ethically dispute bad credit, even if you are aware of the underlying debt.

If you decide NOT to exercise your right to dispute a lien, the first option is to ignore the lien and do nothing.  If you decide to wait it out until the statute of limitations expires (which is usually about 10 years) the lien will remain on your credit report and prohibit you from being approved for any credit.

Another way is to pay off the amount owed.  The lien will be released immediately.   You could set up a payment plan, but this will not remove the lien until the balance is paid in full, plus you will be accruing penalties and interest the longer it takes to pay.

You can also file for an “Offer in Compromise.”  A tax lien will be released if you can settle your back taxes owed for a fraction of the total amount owed.  You will have to prove that the amount you are offering will be equal to or more they are likely to collect from you if they had to go to a collection agency to retrieve the funds owed.

* We were so impressed with Lexington Law that we decided to become a sponsor and put up this website. Get a FREE credit consultation with credit repair experts by calling 1-800-298-4297

If you feel the lien has been filed in error, you have the right to file a Notice of a Right To Request a Hearing” which appoints a judge to look at your case.  The hearing has to take place within 30 days from the sixth day after the the lien filing.  This means you actually have 36 days.  If you win the appeal, the lien will be removed, although the filing of the lien will still show up on your credit report.

Tags:
Posted in credit strategies, Liens | No Comments »