Can an unpaid debt impact my house?
Yes. Under Virginia laws, an unpaid debt, such as a medical bill, credit card debt, or a balance owed for an old car, can become attached to your home. If a creditor gets a judgment against you for money owed, the debt can become a judgment lien that is attached to your house.
How can a creditor get a judgment lien?
If you fall behind on a bill or do not pay a debt that is owed, the creditor can file documents with the court to seek a judgment against you. Typically, the document filed with the court is known as a Warrant in Debt. If the court determines that you owe the debt, the court will then enter a judgment against you.
That judgment would confirm that you owe the debt to the creditor, the amount that you owe, and the rate of interest that would accrue on the debt until it is paid. If that judgment is entered by the General District Court, the creditor can then record the judgment against your home or other real estate you own.
If the judgment is entered by the Circuit Court, the judgment will automatically become a judgment lien and attach to your home or any other real estate you own that is located in the county or city where the judgment is entered.
What happens if a debt collector puts a judgment lien on my house?
If there is a judgment lien on your home, it means that the debt is attached to your house. This is similar to a mortgage loan that is attached to a house except a judgment lien is not created by an agreement you made, rather the lien is placed on your property based on the laws.
The debt associated with the judgment lien must be satisfied when your home is sold. The amount of the debt is likely to continue to increase as interest accrues. In rare instances, a judgment lienholder will move forward with foreclosure proceedings in an attempt to sell your home to pay off the debt.
Can bankruptcy prevent or resolve a judgment lien?
Yes. Filing a bankruptcy case under Chapter 7 or Chapter 13 can resolve a wide variety of debts, including medical bills, credit card debts, payday loans, internet loans, utility bills, and balances owed on vehicles you no longer have.
By including those debts in a bankruptcy case, you can prevent a creditor from taking you to court to attempt to collect the debt and stop a judgment lien from being attached to your home. Additionally, if a creditor has already obtained a judgment lien, filing bankruptcy can help you resolve the debt and eliminate the lien of your house.
At Financial Freedom Legal, we offer free consultations to allow you to explore all of your options with an experienced bankruptcy attorney. You can complete a free consultation via telephone, Zoom, or in-person at our office. We are open 7 days a week and offer evening and weekend appointments. Contact us to begin your journey to financial freedom today!
