What is the Difference Between A Lawsuit, Judgment and Lien?

Many debtors get nervous when all these legal terms start to get thrown around. We are going to explain what each of these are so that you will have a better idea of what you may be dealing with. We will focus on the civil side of things and how they relate to bankruptcy filings.


Say you owe a credit card company $4,000 and you cannot afford to pay them anymore. After several months of not receiving any payment from you, they may choose to sue you for the amount you owe them. This is a lawsuit. They will file it with the court saying they want to take legal action against you for the money you owe them. Once you receive a lawsuit, you typically have 30 days to respond. It is usually best to respond because it will buy you some time so you can figure out what you would like to do before they get a judgment.


If you do not respond to that lawsuit within the certain amount of time, the court will set a date for a hearing. Usually at this hearing your creditor will ask for a judgment against you. This means you now have a court order that is requiring you to pay the money you owe to the creditor. If you fail to pay your creditor after they receive a judgment, the court could place a lien on the property.


One of the most common things that can be called a lien is a mortgage. You took out a loan that is secured by a home. If a creditor obtains a judgment against you in court, that judgment could possibly attach to your home or other property as a lien. That debt that you owe the creditor for the judgment is now secured by your home or other property. You typically must satisfy (or pay) the lien off in full before you are able to sell or transfer the property. In North Carolina, a lien can last for 10 years and then be refilled for an additional 10-year period if it has not been executed or satisfied. This is another incentive to get you to pay that debt. Bankruptcy can help get that lien off your property, but an additional motion must be filed.