Encumbrance

• When a lien is placed on your home, it is a form of encumbrance you will have to deal with. If you do not repay your creditor within a certain amount of time, the creditor could potentially foreclose on your home. If you sell your home, you will have to repay the lien holder before you can keep any of the money for yourself. You could eventually lose your house over the debt.
  
  

Credit Considerations

• When a creditor places a lien on your property, it can also affect your credit. Most liens are noted on your credit reports with all three of the major credit bureaus. This means that when you try to obtain additional credit or financing, the lender will see the liens on your credit report. It will be very difficult to obtain additional financing during this time.
  
  

Extra Cost

• When a creditor places a lien on your property, it could eventually cost you more money. Often, the creditor will charge you interest on the amount of money that you owe until the lien is paid back. This extra interest could add up to a substantial amount of money over the life of the debt. Paying off the debt immediately could save you hundreds or thousands of dollars.
  
  

Limits Your Options

• When a lien is placed on your property, it also has the potential to limit your options. Since the lien represents an encumbrance on the title to your property, it will have to be repaid with the proceeds from the sale of your house. This means that you may not be able to sell your house or move until after the lien is removed. If you need the equity in your house for a down payment on another house, take care of the lien before selling.