What is Lien Amount?
The Lien Amount is your bank's hold or frozen amount for a specific period. This amount is kept locked in your bank account and users cannot withdraw or transfer that money. This amount is frozen against the user's account as security or when a user fails to give the payments, EMIs, Taxes, or loans within the allotted timeframe. That’s when the bank has to impose lein and restrict some available amount within the bank account.
The lien amount will be restricted until bank authorities are sure that you can pay your dues within the timeframe. Later they decide to release the hold from your account. There is no exact cap to the amount that can be locked by the bank. Even the bank can entirely hold the amount available within the bank account.
Lien Marked or Lien Amount
The need for a lien arises from the fact that when a creditor is lending a loan to the borrower, creditors always fall at risk of losing the given amount or not receiving repayments on time and missing on interest rates to avoid these challenges concept of lien is introduced and is so far effective. A lien allows the creditors a legal right to hold the money/assets and recover the amount.
As we got a brief understanding of the Lien amount the next thing to focus on is the meaning of the lien mark. First and foremost if account holders discover that their account is on hold there is no need to worry about that. There could be several possibilities behind this scenario. One being very evident of those are ‘Dues of Loans’ which are supposed to be paid on the requested date. Any delay or miss in that can be the reason for the hold. And another reason could be if the automatic system suscepts any fraudulent or scam activity.
A bank account with a lien hold occurs when the borrower fails to repay the amount on agreed terms. To recover it banks put a lien mark highlighting the fund units reserved by lenders for security purposes. Another reason is associated with ATM transactions where any withdrawal that is not processed or debited from the account again bank freezes the user’s account up until the issue is resolved.
Types of Liens
Voluntary Lien: This lien is formed with the approval of the borrower, and it is a lawful agreement. Some of the common examples of voluntary liens are- car loans, home loans, and other loans.
Involuntary Lien: Involuntary lien is the opposite of voluntary lien it often doesn’t require the borrower’s consent as per financial obligations. Some of the common examples of these are Tax Liens, Judgement Liens, and Mechanic’s Liens.
Statutory Lien: This form of lien is formed by law, that provides certain rights to creditors under specific situations. Let’s check some examples of statutory liens: government institutions regulated liens.
Consensual Lien: It is a mutual understanding between the parties (Borrower or lender) that comes up as an agreement and specifies the terms and conditions. Lines of credit and secured loans are some of the common examples of it.
Non-Consensual Lien: It is imposed by statutory or law against the taxpayer’s property. If they fail to pay the taxes to the government or any tax authority. They can hold the lien amount of his/her personal property.
Landlord Lien: The Landlord can recover the unpaid rent with the help of a landlord lien. However, it primarily depends on the state laws as some states allow this lien form. These are typically enforceable on business or commercial property or leases. They allow landlords to impose a lien on tenants and renters if they do not pay rent.
How to get rid of the lien mark?
To get rid of the lien mark, the account holder must first identify the cause of the lien imposed on their bank account. Once you understand the reason which could be - Missing loan repayment, payment dues, taxes default, etc. address the solution accordingly. We have shared some common causes for the lien mark along with potential solutions to remove it.
- You can remove the lien for concerns like non-payment of taxes by clearing the due payments and any penalty charges involved.
- To cater the issues like Credit Card EMI/loan make the regular payments without any miss or delay or clear any outstanding amount available. The bank will remove the lien mark from your account.
- If a lien mark appears in any linked services like UPI or Virtual cards, try reinstalling the app or deleting the virtual card can help in the removal of the lien mark.
- For any technical issues or unreasonable lien enforcement, account holders have to get in touch with the bank’s help center or customer service and inquire about it.
- Since the bank may impose a lien due to KYC approvals, verify your KYC information as requested, and after they successfully verify it, they will automatically remove the lien.
- You can also physically reach the bank branch for any other query and talk to bank officials to understand the issues. Even you can also take this to high authorities in case of negligence.
Benefits of Lien
Lein plays a significant role in finance and asset-holdings. It looks after the creditor's interest and in guarding debts, Lien has several benefits for both borrowers and lenders. Here we are to put light on some of the benefits and importance of lien-
Moneylender’s protection: Liens help creditors safeguard their repayment process or safeguard their financial interest through a legal protocol. By marking a lien on the holdings or amount, creditors have a route to reclaim belongings if any irregularity of miss in repayment occurs.
Security of Debt: Lien provides an organized pathway for a borrower to secure credits and loans. It provides creditors the security for repayment of the loan, to be fortified in the event of a default.
Conclusion:
Understanding the basis of lien and how it works will help individuals to make better financial decisions. With clarity and knowledge keep in mind to pay your dues or debt on time to avoid any complications. But if one arises you can instantly check with the financial institution and protect both parties' interests.
FAQs
- Will the Bank remove the lien mark if you pay the dues?
Yes, depending on the cause of the lien mark if the reason is due to nonpayment of dues, and once the debt or dues are cleared. They typically remove the lien mark. - Is the lien on the bank account impact my credit score?
A lien is a financial obligation that restricts the withdrawal or funds transfer process for a certain period. As soon as you resolve or tackle the issue that causes the need for a lien, it will be removed. However, it will not impact any score and is not considered a bad thing. If it is implemented voluntarily in a user's bank account. But, if it’s from the bank itself then it might affect your credit score and speak negatively of the account's financial activities. - Is a lien applicable to all types of loan amounts?
No, Lien does not apply to all types of loans. Unsecured or personal loans and credit cards do not consider the lien implications. One must read all the legal documents carefully. Before applying for loans from any secure loan authority, be aware of lien terms and conditions.
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