As many of my readers know, I used to be a debt collector/collection attorney between 2003 and 2007. I’d sue consumers and get judgments awarded for my clients (creditors). Once the judgment was awarded, we’d search various databases to determine what assets the consumers possessed that I could execute on to enforce the judgment. The three main assets I searched for were (1) wages, (2) bank accounts, and (3) real estate.

Whenever I found real estate, I got really excited. I would pay the $33 to file a certificate of judgment against the consumer which would in turn place a lien on the consumers real property (house). When a lien is recorded/filed, it is placed behind all previously filed liens (Mortgages, etc.). Back in the heyday of the real estate market, I’d routinely get checks in the mail from title companies paying off the liens that were filed. You see, when a consumer with a lien would re-finance or sell their house, the liens that were on the house would get paid before the proceeds were dispersed to the consumer. Since homes were appreciating, there was regularly enough equity to pay off the mortgage company and lien holders.

Now, that has changed. Consumers are upside down on their homes and it is rare there is any available equity to justify placing a lien on real property. So, now we get to the point; anytime a collection agency threatens to place a lien on your home (unless your home is paid for or has SIGNIFICANT equity) they are most likely lying to you (not to mention the fact that collection agencies CAN’T put liens anywhere since they are not attorneys). So, since there is no justifiable reason to place a lien on a home that doesn’t have equity that means its unlikely anyone will place a lien on your property. As such, if a collection agency threatens you with (or mentions) a lien, they are lying to you. It is illegal for collection agencies to lie under the FDCPA. As such, if a collection agency mentions a lien, they have violated the FDCPA.

At least there is ONE upside to the housing crisis - No More Liens!

-Jeffrey S. Hyslip

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This entry was posted on Thursday, June 11th, 2009 at 5:02 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.