How to Protect Myself After a Judgment Lien on My Property in CT

Summary: To protect yourself after a creditor obtains a court judgment or judgment lien on your property in Connecticut (CT), consider using the homestead exemption or getting an installment payment order from the court.

Dealing with a judgment lien on your property can be a distressing situation. The fear of losing your home to creditors can cause significant anxiety. However, if you’re a resident of Connecticut, there are legal measures in place to protect homeowners facing judgment liens. In this article, we will explore different avenues available to safeguard your property and find solutions that fit your circumstances. Let’s begin by addressing a common concern: Is it possible for a creditor to initiate foreclosure proceedings on my property despite owing a minimal amount of money?

Can a Creditor Foreclose on my Property if I owe a small amount of money?

The unfortunate reality is that yes, a creditor may indeed attempt to foreclose on your property, even if you owe a small amount of money.

Utility Companies Have Foreclosed on Small Amounts Owed

Utility companies, such as sewage and water companies, have been known to foreclose on properties due to overdue bills, even if the amount owed is relatively small. These companies have certain legal rights that enable them to protect their interests and ensure payment for essential services.

Creditors Who Have a Small Claims Judgment Lien May Foreclose

In addition, small claims judgments have the potential to result in a judgment lien being placed on your property. While the maximum amount for a small claims case is $5,000, judgments for smaller amounts are also eligible to obtain a judgment lien. This means that if you owe a small debt and a creditor successfully obtains a judgment lien, they may pursue foreclosure proceedings.

Connecticut General Statute § 52-380a (c) codifies the law allowing small claims judgment creditors to obtain a judgment lien.

Court Costs, Fees, and Fines May Add to the Judgment Amount

It’s crucial to understand that even if the initial debt is small, the accumulation of additional costs can significantly impact the overall amount owed. Court costs, fines, and legal fees associated with the judgment can add up over time, potentially exacerbating the risk of foreclosure if left unpaid.

Understanding that even a small amount of debt may lead to foreclosure, let’s now explore additional measures that can protect your home after a judgment lien has been placed on your property or a creditor receives a judgment.

The Homestead Exemption May Protect Your Home After a Judgment Lien on Your Property in CT

The Homestead Exemption in Connecticut provides a valuable means of protecting your home from creditors, even in the presence of a judgment lien. To better understand how this exemption works, let’s consider a hypothetical scenario involving Elizabeth, a homeowner facing a judgment lien.

Understanding the Homestead Exemption

In Connecticut, there’s a law called the homestead exemption that helps protect certain property owned by an individual. This law allows the person entitled to the exemption (known as the “exemptioner”) to safeguard their homestead, which is usually their primary residence, up to a value of $250,000.

The law explaining the homestead exemption can be found at Connecticut General Statutes § 52-352b (21).

When applying the homestead exemption, it’s important to note that the exemption is not directly applied to the market value of the home. Instead, we calculate the value to which the homestead exemption is applied by subtracting any statutory or consensual liens, such as a mechanic’s lien or a mortgage, from the fair market value of the property. This adjusted value is then used to determine the extent of protection provided by the Homestead Exemption.

Elizabeth’s Situation

To better understand how the Homestead Exemption can protect your home, let’s examine the hypothetical situation of Elizabeth. By exploring her circumstances, we can see how this exemption applies and the benefits it offers to homeowners facing judgment liens.

Elizabeth owns a home with a fair market value of $300,000. She has an outstanding mortgage of $200,000, leaving her with $100,000 in equity. However, Elizabeth encountered a financial setback, and a creditor obtained a judgment lien against her property for $10,000. This judgment lien poses a potential risk to her home ownership.

Now, with the homestead exemption and her circumstances in mind, let’s see how this legal protection can help Elizabeth safeguard her home.

Applying the Homestead Exemption

To apply the Homestead Exemption, we first subtract any existing mortgages and statutory liens from the fair market value of the property. In Elizabeth’s case, the mortgage of $200,000 is deducted, resulting in a remaining balance of $100,000.

Next, the $250,000 homestead exemption is applied to the remaining balance. Since $100,000 is less than the exemption amount, Elizabeth’s home is fully protected by the homestead exemption. This means that if the property were to be sold, the creditor would not be able to collect any proceeds, reducing their incentive to pursue foreclosure.

The homestead exemption serves as a powerful safeguard for homeowners facing judgment liens. By understanding and utilizing this exemption, individuals like Elizabeth can retain ownership of their homes, even in the face of financial challenges.

The court in Rockstone Capital, LLC v. Sanzo, 175 Conn. App. 770 (Conn. App. Ct. 2017) illustrated how to apply the homestead exemption: “The value of the residence for purposes of the homestead exemption was $82,000, which is $142,000 minus the $60,000 mortgagetaken out on the property by the defendant.”

An Installment Payment May Protect Your Home After a Judgment Lien on Your Property in CT

When faced with a judgment lien on your property, there is a potential solution that can help protect your home: installment payments. Connecticut law allows for the possibility of arranging installment payment plans to facilitate the repayment of a judgment debt. Let’s explore how this option can provide relief and safeguard your property.

Seeking an Installment Payment Order

After a judgment is rendered against an individual, both the judgment creditor (the person owed the debt) and the judgment debtor (the person who owes the debt) have the right to request an installment payment order from the court. This order aims to establish a structured payment plan that enables the judgment debtor to gradually satisfy the debt. An installment payment order is especially helpful if you have a relatively small debt and would not want to lose your property over such a small debt.

The court will carefully consider the financial circumstances of the judgment debtor before granting an installment payment order. This evaluation takes into account factors such as income, expenses, and other financial obligations. The goal is to determine an installment payment schedule that is reasonable and feasible for the judgment debtor to fulfill.

The law explaining installment payments can be found at Conn. Gen. Stat. § 52-356d.

Protection through Stay of Execution

In cases where the judgment pertains to consumer debt, the court has the authority to stay (stop) any property execution or foreclosure proceedings as long as the judgment debtor complies with the installment payment order. This means that if the debtor adheres to the agreed-upon payment plan, the creditor cannot pursue property execution or foreclosure actions based on the judgment lien. The court ensures that this stay of execution is reasonable, considering the nature of the debt and the financial circumstances of the judgment debtor.

The law explaining that a judgment lien on a consumer judgment cannot be foreclosed if an installment payment is not in default is found at Conn. Gen. Stat. § 52-380a (c).

Maintaining Compliance and Preventing Foreclosure

In instances where a consumer judgment lien has been filed, the complaint must indicate whether a stay of execution was entered through an installment payment order. Additionally, if such a stay was granted, the complaint must specify any default on the installment payment order, which serves as a precondition for initiating foreclosure proceedings. The judgment creditor or their attorney must provide a statement regarding the debtor’s default on payments before commencing any foreclosure action on the judgment lien. This is helpful because so long as you are not in default, your creditor will not be able to foreclose on your property.

By exploring the option of installment payments and diligently adhering to the agreed-upon payment plan, you can protect your home from foreclosure and work towards satisfying the judgment debt.

Conclusion

When confronted with a judgment lien on your property in Connecticut, it’s important to understand that there are legal provisions in place to protect homeowners. Whether it’s the homestead exemption or negotiating an installment payment plan there are options available to help safeguard your home and find a resolution. Remember to consult with an experienced attorney knowledgeable in Connecticut law to ensure you make informed decisions and navigate the legal process effectively. By exploring these avenues and understanding your rights, you can protect your property and find peace of mind in the face of a judgment lien.