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HELPS is a nonprofit law firm and 501(c)(3) charitable organization. We serve senior citizens and disabled persons struggling with debt.

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Judgment Liens

Dealing With a Judgment Lien On Your Home

    A senior couple recently contacted HELPS. They were served with legal papers for $5000 they owed on an old credit card. They had never been sued before, but they had heard that a judgment would become a “lien” on their home and were worried about what that meant. Their income was $2500 per month from Social Security and a VA pension. The husband was disabled, and all their income was used for their basic living expenses like food, medicine, and the mortgage. There was nothing left to pay the lawsuit for $5000, let alone the $25,000 they owed on other credit cards.

    I explained that Social Security, pensions, disability income and VA benefits are completely protected by federal law. Those sources of income can’t be taken, even if someone obtains a judgment.

    “But what about a lien on our home?” they asked.  

    In most states, a judgment automatically becomes what is called a “judgment lien” on real property, which includes a home on land. It’s is not like a mortgage loan, which requires a payment each month. The lien just sits there until the house is sold. For seniors who have little or no equity in their home, a judgment lien is essentially meaningless. It’s a lien on nothing.  

    But this couple had about $80,000 in equity in their home, meaning the home was worth about $80,000 more than the amount they owed. Each state has “homestead exemption” laws that protects a certain amount of equity in a home.  The homestead exemption in their state was $50,000 for a married couple, so they had $30,000 in equity above the homestead exemption.

    What would happen, then, if they had a lien put on their home? Theoretically, while it is possible for a judgment creditor to foreclose a judgment lien, the process is complicated and expensive.  It almost never occurs for a credit card debt, medical debt, or almost any other consumer debt – even if the home is owned free and clear.  

    I explained that in nearly forty years of my law practice dealing with exactly these matters, I had seen a forced foreclosure attempted on one or two occasions.  Judgment creditors let a judgment sit there, hoping to be paid at some point in the future – perhaps when the home is sold.  And, even in the extremely unlikely event that a judgment lien foreclosure is attempted, there are ways to stop it. 

    “What about bankruptcy?” they asked.  

    I explained because they had around $30,000 in equity over the amount of their state’s homestead exemption, if they filed for bankruptcy, their home could be put up for sale by a Chapter 7 bankruptcy trustee. When the house sold, the couple would receive their homestead exemption first, then the creditors would be paid. As the couple wanted to keep their home, Chapter 7 bankruptcy clearly wasn’t an option.
    Another form of bankruptcy, Chapter 13, allows a person to keep a home that has equity over the homestead exemption.  However, because the couple had so much equity, they would likely need to pay a Chapter 13 trustee around $500 per month to pay all their old debt over the next four to five years. But they had no extra money each month to make Chapter 13 payments.

    “What if we do nothing?” they asked.  I explained again that the judgment lien would remain on their property. State laws may vary as to the amount of interest it can accrue every year, how long the judgment lien will last, and whether or not it can be renewed. Their income was protected and couldn’t be garnished, however, so they could choose whether or not to make payments on the judgment.

    That was the answer.

    There are always options for homeowners – perhaps downsizing, or obtaining a reverse mortgage, or pursuing a form of bankruptcy. However, for many seniors receiving protected retirement, the best option could be simply to do nothing. If they receive a judgment lien, they can deal with it when the home is sold.

    This couple was also relieved to learn they didn’t have to worry about the other credit card debt they couldn’t afford.  They were thankful to know about HELPS, a nationwide nonprofit law firm that protects seniors from unwanted collector contact – someone they could always call and talk to if they were worried or concerned.  Visit our website at  or call HELPS toll free at 855 HELPS US to learn more.  HELPS never turns a qualified senior away who needs our help.

Peace of Mind
These HELPS clients were dealing with harassing debt collectors and anxiety over old Debt. HELPS provided a solution to their financial worries.