Lien on Property vs. Wage Garnishment
Property liens and wage garnishment are similar in that both restrict your rights to an asset. However, while one is always a negative, the other can be done voluntarily for your benefit. Wage garnishment is a punishment for not paying your debtors. A property lien can be the same, but more often than not, it is a tool used to secure collateral while allowing you to borrow money for your personal needs.
Other People Are Reading
-
Property Lien
-
A lien against your property represents a creditor's security interest in it. The most common example is a mortgage. If you buy a $200,000 house and put $50,000 down while borrowing the remaining $150,000 from a lender, the lender puts a lien in the amount of $150,000 on your house. If you do not pay the loan, the lien allows the creditor to seize the property. While this is one example, liens can also be placed on your property against your will. Examples include mechanics liens for unpaid construction costs or tax liens for unpaid property taxes.
Wage Garnishment
-
Wage garnishment is a potential end result of prolonged nonpayment of debts. Your creditor, as mandated by the courts, will take a portion of your salary each pay period until the debt is satisfied. The garnished amount will come directly from your salary without even touching your account. The only way to remove the garnishment is to fully satisfy the outstanding debt.
-
How Property Liens Work
-
When you close on a mortgage loan, you will sign a mortgage document. This document is sent to the appropriate county clerk's office to be recorded. This lien now becomes public record. If you attempt to apply for a real estate loan at another lender, it will run a property search. The search will reveal that another lender has a loan against your property. The second lender can still grant the loan and file a mortgage. However, the lien will be in second position, meaning the initial lien holder has a priority claim on the property. For involuntary liens, the contractor or taxing authority will file the lien direct with the county clerk. Your signature is not required.
How Wage Garnishment Works
-
After approximately 90 days of not paying a debt, the obligation will be turned over to collections. The collections agent will contact you, quite aggressively in some cases, to recoup the debt. If you continue to not pay, the creditor will petition the court to file a judgment against you. After reviewing the case, the judge may opt to allow the creditor to garnish your wages. Your employer will be notified and a portion of your paycheck, minus necessary living expenses, will be delivered directly to the creditor on each pay period. This will remain in effect until the debt is paid in full.
-
