If you have debts you can’t pay, it’s a critical question.
The man sitting across the desk from me owed a fistfull of taxes. He proposed to transfer his interest in the family home to save the house from the tax lien which was filed against him.
He thought that the lien on the house would vanish once the home wasn’t in his name any longer.
And that sort of follows from the idea that the lien is “on” the person.
But that’s not how liens work.
Liens are creatures of law: whether you think about them as barnacles, leaches, or ticks, the idea is the same.
They attach to assets and follow the asset wherever it goes.
Liens on property
Liens are interests in the property owned by a person against whom a lien has been filed.
The lienholder has rights in the property. Those rights are different from the rights of the legal owner, but they are powerful still.
The lien operates to carve out a slice out of the affected assets that are owned by the person who owes money in favor of the creditor. The lien creates collateral for payment of the debt. [Read more…]