The North Carolina Bankruptcy Information Blog

Liens―a kind of property interest that secures payment on a loan, or the performance of some obligation―are a thorny little issue in bankruptcy cases. Unlike many kind of debts, liens generally (with only a few exceptions) will not be discharged automatically in a bankruptcy the way unsecured debt is. Liens come in many flavors―how about tax liens, mortgage liens, and mechanic’s liens, to name a few― but they generally fall into one of two categories: consensual liens and nonconsensual liens. Consensual liens are themselves split into two categories; one category of consensual liens is generally referred to as a “purchase-money interest,” while the other is known as a “nonpurchase-money security interest.”
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1) Consensual Liens
purchase-money security interests, nonpurchase-money security interest

2) Nonconsensual Liens
Judgment liens, statutory liens, tax liens.…

Many of us encounter purchase-money security interests when we buy a car or perhaps shop at department stores. This is the situation where a lender gives you money to buy a specific item (a car; a tv, a bedroom set, etc.) and in exchange you give him a lien on the property, allowing that property to secure the debt as collateral. The other kind of consensual lien, the non purchase-money security interest, apart from being a mouthful, is somewhat less common. You’re likely to come across it if you’ve been given a small loan from a store front lender such as American General or Beneficial.…