What is the effect of filing a lien?

When a creditor files a lien in the State of North Carolina they are legally protecting their right to repayment. A lien is a legal claim against a person’s property, whether it is real estate, a vehicle, or personal possessions. It allows the creditor to benefit from any money made from the sale of the property or the use of the property to pay off the debt. A lien creates a financial obligation for the debtor. This means that the debtor must pay the amount that is stated in the lien, regardless of any money made from the sale of the property. In North Carolina, the lien can be enforced by the creditor if the debtor fails to pay the debt. When a lien is placed on property, it goes onto the public record. That way any potential buyers of that property will know that the property is subject to a lien and be aware of the debt that has to be paid before they purchase it. Another effect of filing a lien is that the creditor gains a priority status for their debt. This means that if a debtor has multiple debts and they file for bankruptcy, the creditors with lien will be paid before the creditors without liens. When a lien is placed on property it is a sign that the creditor is serious about being paid and will do what it takes to get payment for their debt. Liens are important tools for creditors in North Carolina as they help them secure repayment for their debts.

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What is the effect of filing a lien?

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