Yes. But there may be something you can do about it. Maine law has some protections for homeowners in this situation.
When can this happen?
As a general rule, before a creditor can put a lien on your home, they must get a court judgment against you. A judge must decide that you actually owe the money and that the creditor has the right to try to collect it from you.
A creditor with a court judgment has many ways to collect the money. One way is to use wage withholdings or bank account garnishments. You can learn more about this kind of debt collection in our Guide To Debt Collection in Maine.
They can also put a lien on your house. Once the creditor gets a judgment, they may record a lien in the registry of deeds. Usually, this means that the creditor is claiming a right to a part of your home's value.
What does having a lien on my house mean?
The creditor will get paid if you sell your home or if you refinance. But if the amount of value you have in the house is low, it may be protected against a judgment creditor.
What protections are there for Maine homeowners?
The value in your home that is more than what you owe on your mortgage is called your equity. So, if your home is worth $100,000 but you still owe $60,000 on your mortgage, you would have $40,000 in equity in your home.
Your equity inyour home is protected from a creditor up to $47,500. This protected value goes up to $95,000 if:
- a minor dependant lives with you, or
- you or are at least 60 years old or disabled, or
- you have a dependant who is at least 60 years old or disabled.
What can I do?
If a creditor put a lien on your home and the entire equity in your home is protected, you can demand that the creditor remove the lien. To do that, you can use this form: Request to Discharge Execution on Real Property.
Include evidence of the value of your property and any amount you owe on the property with the form. For example you could include the town’s assessed value or a real estate broker’s opinion of value. You can also attach a bank mortgage statement.
Make a copy of the form and your evidence. Keep your copy in a safe place. Send the original to the person or company who put the lien on your house. To make sure you have a record that your letter was delivered, send it by certified mail, asking for "return receipt" and "restricted delivery."
The creditor has 15 days to remove the lien from the time they get the form. If they don't, you can ask a court to order the creditor to remove it. If you win, the creditor must pay your court costs and attorney's fees. You may want to call an attorney to help you and they could get paid by the creditor.