Some liens are voluntary (or consensual), which means they are established by agreement between the creditor and the debtor. Consensual liens consist of mortgages, security interests, auto loans, and mortgages on personal property. As opposed to """"actual"""" property, such as land, chattel is defined as movable property such as vehicles, household furnishings, and livestock.
Involuntary (or non-consensual) liens are created by statutes that grant creditors the right to guarantee repayment of their loans. They exist to maintain the creditor-debtor nature of the relationship. Involuntary liens include tax liens, attorney's liens, weed liens (assessed by the government to prevent properties from becoming a public hazard), and mechanic's liens (securing payment for work performed on property).
Due to the provisions of the Bankruptcy Code, certain liens that could otherwise be collected upon can be avoided when an individual files for bankruptcy. There are three such instances: when liens are preferential, when liens are covert, and when liens impede exemption. In the majority of bankruptcy cases, the last option, where liens diminish exemption, is most likely to apply.
Under certain circumstances, the Bankruptcy Code allows debtors to claim certain assets as exempt. Consequently, a lien that might encroach on these exempt assets can be avoided in some instances. In fact, the majority of Chapter 7 bankruptcies are ""no-asset"" cases. This means that the debtor will likely not have to give up anything, as many assets, such as those required for daily living, are protected from creditors. There are some exemption laws that are fairly universal (at least in the United States) that are not necessarily the same in every state. All states exempt retirement IRAs up to $1 million, for example.
The ability for bankruptcy filers to avoid liens can significantly alleviate the severity of the situation. Keeping valuable assets, such as a car or retirement fund, makes a new beginning possible.
" - https://www.affordablecebu.com/
