Where Liens Come From
By Cathy Moran, California bankruptcy lawyer on May 9, 2007 in General Bankruptcy Information, Mortgages
Secured creditors get a better deal in bankruptcy than unsecured creditors. Our Anglo Saxon based law has long given importance to the rights of property owners, and that’s what a secured creditor is: the owner of an interest in the debtor’s property. That interest in property, whether real property or personal property, is called a lien.
A secured creditor has rights in collateral: a secured creditor holds a lien on the property of the debtor. There are three types of liens:
- Statutory liens
- Judicial liens
- Voluntary liens
Statutory liens are created by statute. Tax liens are the most familiar kind of statutory lien. They are created by legislation which prescribes the conditions that trigger the imposition of a lien on the debtor’s property.
Judicial liens are create by the action of judges. The most frequent kind of judicial lien is the judgment lien. It arises to support the collection of a judgment.
Voluntary liens are created by the act of the owner of the asset. The owner grants a lien on an asset to secure his payment of a debt. A mortgage is the most common kind of voluntary lien.
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