Filing a Judgment Lien to Collect a Debt: Is it worth it?

When a plaintiff wins a judgment in civil cases the court typically orders payment from the defendant, but how can you collect a debt if the debtor refuses to pay up? If someone owes you money and you have already filed a successful lawsuit, one way to try and get payment is to file a judgment lien on their property, which allows you to collect a certain amount of money from the sale of the debtor’s property. There are strict procedures for filing a judgment lien and a number of factors can affect whether you will be able to collect on it at all. Seeking the counsel of experienced business attorneys who can advise you on the most effective course of action to collect a debt can help you save time, money and a lot of headaches.

How Does a Judgment Lien Work?

In Pennsylvania, a judgment lien can only be attached to real estate, which may include land, a home, condo or other real property. It is recorded with the clerk of the court of common pleas in the county where the property is located. Once it is recorded, it will appear on any title search of the property.  A judgment lien can remain attached to the debtor’s property for five years. Generally, the lien must be removed or released before property can be transferred to another person or entity. In rare cases a lien may be transferred with ownership if the buyer is willing to accept it.

Is a Judgment Lien Worth it?

It depends. There are a few factors that can affect a creditor’s ability to collect on a judgment lien. If the property is a debtor’s primary residence, they may be able to claim a homestead exemption, which limits the amount of money a creditor can collect (if any). If a debtor has other liens on their property or is facing foreclosure, that can make it even more difficult to collect. In addition, a bankruptcy lawyer may advise a debtor who is financially underwater to file Chapter 7 bankruptcy, which may wipe out the lien altogether and make it impossible to collect at all.  Each situation is different and depending on the amount of the debt, the time and money you spend on trying to collect on a judgment lien may not be worth the cost.

Other Types of Liens

If you work in the construction business as a contractor or subcontractor, filing a mechanic’s lien is a more effective option to collect payment for work that has been completed. A mechanics lien that is properly filed on a PA property will significantly increase the chances of a debt being paid in a timely manner, and you do not have to obtain a judgment from the court in order to file a mechanic’s lien. Experienced real property lawyers can assess your specific circumstance and advise you on whether a mechanic’s lien would work or if you would be better off filing a lawsuit against the debtor.

Do you need assistance with collecting a debt? The experienced business lawyers at our West Chester law firm can help.