Judicial Lien and Garnishment. CPA Exam REG

In this video, I explain judicial lien and garnishment as it related to secured transactions.
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Creditors who do not have a security interest or mortgage on a debtor's property can still obtain rights to that property through legal processes. Two common methods are:
Judicial Lien: This is a legal claim against the debtor's property, granted by a court. It allows the creditor to have a right to the property if the debtor fails to pay the debt. For example, if John owes $10,000 to a credit card company and fails to make payments, the company can go to court. The court might place a judicial lien on John's house, meaning if John sells the house, the proceeds would first be used to pay off the credit card debt before John receives any money.
Garnishment: This involves taking property or money that is owed to the debtor, but is in the hands of a third party. For example, if Jane owes money to a bank, the bank can request a court order to garnish her wages. This means a portion of Jane's salary, which is paid by her employer, will be directly sent to the bank to pay off her debt. The employer, in this case, is the third party holding property (wages) owed to the debtor (Jane).
These legal tools provide a way for creditors to recover debts even when they don't have a direct claim on the debtor's property as collateral.
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