Introduction Flashcards
General creditors (aka Unsecured Creditors)
1.Do not have a lien on any property belonging to the debtor.
- Their only recourse is against the debtor personally.
3 main questions to ask in a creditors rights problem?
- What type of creditor is trying to collect money from the debtor?
- Where are we in the process?
- What type of property is at issue?
Lien Creditors (aka Secured Creditors)
- Have some type of lien on property belonging to the debtor.
What are thee 3 types of liens a secured creditor can have?
- Statutory and common law liens
- Judicial Liens
- Consensual Liens
What is a lien?
An interest in the debtor’s property that makes it possible for the creditor to get at the value of the property. (Often by selling the property)
What is a statutory and common law lien?
Example: by not paying income tax the Fed. Gov. can obtain a lien on virtually everything you own. The source is a statute.
Example: a mechanics lien.
These liens are not consensual, they do not arise by agreement.
A common law lien arises through judicial decision making.
A statutory lien arises under a statute.
What is a judicial lien? (This is the main type tested on VA bar)
Arise out of judicial proceedings.
Includes judgement liens, garnishment liens, attachment liens, and execution liens.
These liens are also non-consensual.
Consensual Liens definition-
Arise by agreement between debtor and creditor.
Article 9 secured transactions involves consensual liens on personal prop.
(EG: you borrow money to buy a car, part of the deal with the lender is to make payments, the lender has the right to repo the car, this is a consensual lien.)
Note: Consensual Liens are real property deeds of trust (in VA).
Tenancy by the entirety exception **
In tenancy by the entirety, one tenant cannot encumber the prop on their own.
That means that creditors off one tenant will not be able to reach the property at issue.
BUT, creditors of Both tenants will be able to. .
