When you file for bankruptcy, you have to list all creditor claims secured by property, and the nature of the lien. All of this information will go on Schedule D of your bankruptcy petition.
Figuring out what type of lien the creditor has can be tricky in some situations. If you can’t determine the type of lien the creditor has, consult with an attorney.
Here are the options:
- First mortgage. You took out a loan to buy your house. (This is a specific kind of purchase-money security interest.)
- Purchase-money security interest. You took out a loan to purchase the property that secures the loan—for example, a car note. The creditor must have perfected the security interest by filing or recording it with the appropriate agency within 20 days. (Fidelity Financial Services, Inc. v. Fink, 522 U.S. 211 (1998).) Otherwise, the creditor has no lien and your attorney will list the debt on Schedule F (unsecured debt) instead.
- Nonpossessory, nonpurchase-money security interest. You borrowed money for a purpose other than buying the collateral. This includes refinanced home loans, home equity loans, or loans from finance companies.
- Possessory, nonpurchase-money security interest. This is what a pawnshop owner has when you pawn your property.
- Judgment lien. This means someone sued you, won a court judgment, and recorded a lien against your property.
- Tax lien. This means a federal, state, or local government agency recorded a lien against your property for unpaid taxes.
- Child support lien. This means that another parent or government agency has recorded a lien against your property for unpaid child support.
- Mechanic’s or materialman’s lien. This means someone performed work on your real property or personal property (for example, a car) but didn’t get paid, and recorded a lien on that property. Such liens can be an unpleasant surprise if you paid for the work, but your contractor didn’t pay a subcontractor who got a lien against your property.