Olney, IL asked in Collections for Illinois

Q: Can they repo you home on a because of outstanding debt that has nothing to do with the house.

She has a $9000 loan that is completely different from her house note and she is afraid they are going to go after her house if she doesn't make her payments on time.

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1 Lawyer Answer
Andrew John Hawes
Andrew John Hawes
  • Collections Lawyer
  • Niles, IL
  • Licensed in Illinois

A: Yes (but it is very uncommon). A creditor can place a lien upon her house for an “unrelated” debt. BUT, the creditor must first file a lawsuit against her, and must win a court judgment against her. Then, the creditor can get a memorandum of judgment signed by the judge and file it with the recorder of deeds. This places a “cloud” on the title, meaning simply that the lien will appear in any title search done by potential new buyers. She will have to clear this “cloud” to sell the property, meaning that she will have to pay the creditor to sell the property (but this can be done from the proceeds of the sale).

Another important point here is that the creditor’s can only get paid if she has more than a statutory amount of equity in the house ($15,000 I believe, $30,000 for married couples). If, for example, her house sells for $95,000, and she owes $80,000 on a mortgage, the creditor gets nothing. That's because she gets her $15,000 “homestead exemption” before the creditor gets anything, which in this example leaves nothing for the creditor. The creditor would then have to release their lien without getting paid.

In theory, a creditor can also foreclose on their lien, and sell your property. This rarely happens. Unless the house is really valuable, and there's a big judgment, it's just not worth the trouble. Also, any pre-existing mortgage on the property will get paid first, often leaving little to no money for the judgment lien creditor to collect on.

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