 TITLE: What Is a Lien? CONTENT: How Does a Lien Work?\n---------------------\nWhen you offer collateral for a loan, the lender requires a guarantee that it can seize the property to recoup its loss if you default on your debt. A lien is the legal claim that helps creditors do this.\nThere are two main types of liens: consensual and involuntary. Consensual liens are ones you agree to, like what happens when you get a mortgage or car loan. Involuntary liens are those filed due to nonpayment of a debt, commonly when taxes go unpaid or payments on a loan become delinquent.\nTo understand how consensual liens work, consider your mortgage. When you buy a home with a mortgage, the lender retains the right to seize the home to recoup what they're owed until the loan is completely paid back. This legal claim is done through a mortgage lien that gets removed once you've paid off the debt.\nAn involuntary lien, on the other hand, is one filed by a creditor in pursuit of outstanding debt. Involuntary liens are typically placed on your assets by a court; they give a creditor legal claim to what they're owed and can result in foreclosure if they go unpaid.\nInvoluntary and consensual liens do essentially the same thing, but the difference is involuntary liens are considered derogatory as they are a result of nonpayment. Consensual liens—like your mortgage or auto loan—are just a side effect of borrowing, as they provide an avenue through which a debt can be collected if you default on your obligation. END