The state and federal governments declare some assets as exempt. The debtor is allowed to keep certain property so that they are not hurt past financial repair. Exempt assets include, but are not limited to: motor vehicles, necessary clothing, necessary household goods, household appliances, jewelry up to a certain value, pensions, some of the equity in the home, tools of their trade, some of unpaid earned wages, public benefits, and damages awarded for personal injury. The exemptions can vary depending on the state and must be compared the federal exemptions.
If the asset is exempt, then you can determine whether the lien is a type that can be eliminated. Generally judgment liens can be eliminated and consensual and statutory liens cannot be.
If the amount of the lien impairs the exemption, you must determine the amount of the lien that can’t be removed. The can be found by taking the value of the asset, minus the amount that is exempt. If the asset has an unlimited exemption, the entire lien can be eradicated.
Agricultural liens were created to give farm equipment sellers security for leased products.
A consensual lien can be a purchase-money security interest lien—where the credit is given to the debtor for the purchase of a property and the property secures the debt—or a non-purchase-money security interest lien—where the debtor uses property they already own as collateral in order to obtain a new loan.
Liens exist in many types and by many names for both real and personal property. “Mechanic’s lien” is the general term for a lien on real property by any licensed professional who contracts with the owner to improve the land structure or supply materials for the improvement.
There are two types of liens that are under the statutory category.
An accountant’s lien gives an accountant the ability to hold onto their client’s paperwork as a type of collateral in order to insure payment for their services.
In order for an architect to insure that they are paid for their services, they are able to retain the work they have done until they receive payment.
Judgment liens are involuntary and give a creditor the ability to seek foreclosure in order to receive payment.
The agent’s lien protects a real estate agent from not receiving payment after providing services.