The creditor can foreclose on the judgment lien property. Once the judgment lien attaches, it works very much like the consensual lien of a mortgage, a car loan or a security interest in accounts receivable. It is possible to grant a similar consensual security interest in almost any type of property, including equipment or accounts receivable.Ī judgment is a “floating lien.” The creditor needs to “attach” this floating judgment lien to specific property of the judgment debtor. Your car loan security agreement said that if you failed to keep your car loan payments, the bank could repossess the car and sell it. The last time you bought an automobile, you probably obtained a car loan and granted a security interest in your new car, very similar to the mortgage on real estate. The mortgage said that if you failed to keep your contract to repay the loan, the bank could sell the “security property” and take the sale proceeds to repay the loan. The mortgage granted the bank a “security interest” or “lien” in a specific piece of property (your house). The other paper you signed was a mortgage. If you fail to keep this agreement, the bank could file suit “on the contract” and obtain a judgment. This paper said that you would repay the bank in monthly payments over a period of years. This was your “contract” or unsecured promise to pay. You were asked to sign two sheets of paper. Think about what happened the last time you bought a house. A judgment lien is an example of a judicial lien. Liens can be “consensual” or “statutory” or “judicial.” A mortgage is an example of a consensual lien.
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