When economic times are good and credit flows freely from banks and other lending institutions, then individuals are encouraged to buy or purchase items or products outside their current financial reach thereby creating a precarious fiscal situation in which the individual is constantly in debt to the lending institution who initially made the loan available; however, when this situation is exacerbated by a weak economic outlook, personal financial setbacks, or the loss of a stable source of income, then the debtor may find that they are unable or unwilling to pay back a loan obligation thus necessitating in the court ordered penalty of a judgement lien. A lien can have several positive characteristics when viewed from the lender's perspective: a way of deciding what happens to a property without taking full ownership of said property, a means to force repayment of back payments without initiating the expensive foreclosure process, and a way to illustrate to potential clients and debtors that there are consequences to make purchases outside their financial reach.



A lien is legally binding act that places a virtual hold on any reasonably valuable asset that has been listed as collateral on a loan extended by a lending institution or bank. This means that the stated asset or assets cannot be sold, transferred, or otherwise used until the delinquent loan or mortgage payments have been repaid. The assets are, in essence held hostage, until a payment schedule can be agreed upon by both the debtor and the lender. It is important to note, that for legal reasons, the lender does not actually take ownership over the assets. They merely make those assets unavailable to the debtor until he or she has made an effort to repay a delinquent account. A judgement lien is special type of lien that is issued by a deciding court or judge – hence the term.

Though there is any number of means to help coerce or force a debtor to repay a loan, pursuing a lien against stated assets is more commonly used by banks and other lenders than other means of punishment. This is true for many reasons including the fact that the bank can take a leading role in what happens to a stated asset without actually going through the legal hassle of declaring ownership of that asset. Therefore, a debtor looses the ability to manage his or her asset, yet retains ownership over that asset. This means that the debtor is still responsible for the asset and must pay any fees associated with that asset (housing insurance, maintenance costs, or realty fees if the property is being sold to cover the value of the delinquent loan). This can save the lender the expense and hassle of activity managing an asset.

A lien is also a good way to force a debtor to repay his or her loan without actually foreclosing on a property. Foreclosure means that a bank actively pursues ownership of a property or asset. It is an expensive process that can devaluate the market value of a property to such an extent that it will never be able to cover the value of the extended loan. By securing a judgement lien a lender can recover the loan without pursing the expensive process of foreclosure.

A lien therefore, can be solid means for a lender to try and force repayment of a delinquent loan or mortgage.