A lien by definition is a property interest that secures a debt. What is a debt? You owe somebody money, that’s a debt. In general, debts are unsecured. It’s an IOU. I buy something from you. I promise to pay you $50.00. I owe you the $50.00. Now, what if I don’t pay? If I don’t pay, you have the right to go and sue me and get a judgment.
That judgment may give rise to a property interest :so a lien gives a creditor rights in a specific piece of property. One of the important lien rights is that it takes away options from the debtor, the person who owes the obligation. For example, if you have a lien in real estate, you have the right as the lienholder to bring the sheriff out and foreclose on that property. Or you can just sit and wait for the debtor to sell or refinance that property. They can’t do that unless they take care of your lien. That lien that secures the debt becomes attached to the piece of property, and that’s why it becomes a property interest.
This is very important because the idea is that when you file bankruptcy, the property interests that you have and that your creditors have in your property flow through the bankruptcy. Bankruptcy is not supposed to disrupt property interests that are created under the laws that aren’t the bankruptcy laws, although there are some important exceptions such as: lien stripping in Chapters 7 and 13; lien modification in chapters 11 and 13; and recovery of preferences and fraudulent conveyances.
A lien in its most basic form is a property interest that is created to secure a debt obligation.
