If you're loaning someone money to buy a car, you'll want to make sure the debt gets repaid. Filing a lien gives you a claim over the vehicle in the event the borrower misses her payments. Similarly, you can file a lien if you have done work on a car and the owner owes you money. The procedures involved in placing a lien against a debtor's property differ from state to state and each case is different. Talk to a local attorney for legal advice about your ability to file a lien and the likelihood that you'll get your money back with this method.
A Lien Protects a Debt
If you have a lien on someone's property, you have an ownership interest in that property. For example, if you obtain a car loan from a bank and use the loan to buy a car, you give the bank a lien on the car. The lien allows the bank to later sell the car to recover any unpaid debt money in the event you fail to pay back your loan. Because the bank has a property interest in the vehicle, it doesn't have to ask a court's permission to repossess your car. Plus, you cannot sell the vehicle while it has a lien on it. If you wanted to sell, you would have to pay off the bank so the new owner could get the title to the car.
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Mechanic's Lien for Owed Money
When you do work on a car or store it and the owner doesn't pay his bill on time, you can file a special type of lien called a "mechanic's lien" against the vehicle's title. The lien must be for the reasonable value of the work you've done. Once the lien is in place, the owner cannot sell the car until he has paid off your debt. Talk to your state's DMV about the procedure for filing a mechanic's lien. Most times, you will fill out an "Entry of Lien" form and file documents showing that you are owed money and are legally entitled to file the lien.
Suing for Private Debts
If someone owes you money, you cannot simply show up at her house one day and start taking property to satisfy the debt. Instead, you must first sue the debtor in court. Like any other lawsuit, you have to make sure you follow procedures and notify the debtor that you've filed the case. The debtor has the right to appear in court and defend against your claim, but if he loses, the court will declare you the winner and issue a judgment. The court will declare that the defendant — the debtor — owes you money and that you are entitled to collect it from him.
Collecting a Judgment Through a Lien
Once you've sued a debtor and won a judgment, you can then get the money owed you, a process known as collections. Armed with the court's judgment, there are several ways you can collect the money from a debtor, including by placing a lien on her personal property, such as her car. Though procedures differ among jurisdictions, you can file the lien with the court, then ask the court to order the sheriff to take possession of the automobile. The sheriff can then sell the vehicle and pay you the proceeds.