- If you have already gone through the bankruptcy process and received a bankruptcy discharge, the nature of your debt determines whether a creditor can put a lien on your assets. Generally, debts incurred before you file for bankruptcy are wiped out by your bankruptcy discharge, meaning none of your pre-filing creditors can get a lien against you. However, if you have incurred new debt since your bankruptcy discharge, you remain liable for that debt. Non-payment of post-discharge debt can lead to a lien filed against you.
- Even before you receive a bankruptcy discharge, you may be able to prevent creditors from putting a lien on your assets. The moment you file a bankruptcy petition, the court protects you from creditors via the automatic stay, which is bankruptcy legislation removing a creditor's rights of collection for the duration of your case. A creditor with a lien cannot enforce it until the court lifts the stay or issues a discharge. No additional creditors can file for liens, either, while the stay remains in force.
Process to Lien
- Not every creditor that wants to can put a lien against your assets, whether you file bankruptcy or not. A creditor desiring to get a lien must start the process by filing a lawsuit for non-payment of debts. If the lawsuit is successful, the creditor will receive a judgment authorizing further action. After more legal paperwork, a creditor with a judgment can then gain the right to put a lien against your assets.
- Secured liens are a different type of lien than the liens that creditors receive after filing lawsuits and obtaining judgments. A secured lien is the right any creditor has in any property that you borrow against. For example, if you buy a new car on credit, the company extending you the car loan has a secured lien against your auto until you pay it off. Creditors with secured liens still retain this interest in your property even after you file bankruptcy.