4 Points about What Happens to Statutory Liens in Las Vegas Bankruptcy | Haines & Krieger

A lien is a legal claim (in Las Vegas or elsewhere) by one party over the property of another. There are three types of liens: judicial, voluntary, and statutory. An example of a voluntary lien is a mortgage on a house, and a jury award entered into the record by a court in a civil lawsuit is a judicial lien. Statutory liens, however, differ. They occur by operation of law when two or more parties engage in certain acts. Here are examples of statutory liens that pop up in personal bankruptcy cases.

  • Tax lien: When people don’t pay their taxes, the IRS or state or local revenue agency can affix a tax lien on their property.
  • Landlord’s lien: Landlords can attach liens to tenants’ furniture if they fail to pay rent.
  • Warehouseman’s lien: Owners of storage space can attach a lien onto the property of tenants’ property stored there.
  • Mechanic’s lien: A “mechanic” in this context means someone who either builds or provides materials for construction improvements on real property.
  • Artisan’s lien: These are similar to mechanic’s liens except they apply to those who repair personal property, e.g. automobiles.
  • Vendor’s lien: The “vendor” here isn’t selling goods but is an agent for someone selling real property. If the buyer fails to purchase the property, the vendor can demand payment on the lien on the seller’s property.

Here are four points about what happens to a statutory lien in Las Vegas bankruptcy:

  1. Statutory liens are typically nondischargeable in bankruptcy.
  2. One important exception is tax liens, but these must meet specific requirements before a discharge will be granted.
  3. One problem the bankruptcy code addresses is whether a statutory lien is a preference that can be “avoided” by the trustee. This would mean the debtor attempted to allow the creditor access to a security that would otherwise be folded into the bankruptcy estate and distributed to other creditors.
  4. In most circumstances, however, a statutory lien cannot be avoided as a preference, even if the lien was documented within the 90 days before the debtor filed bankruptcy. Section 545 of the bankruptcy code [http://www.law.cornell.edu/uscode/text/11/545] details the exceptions.

By the time people speak to a Las Vegas bankruptcy lawyer, they often owe much debt, often to multiple parties. It’s worthwhile to know which types of debts cannot be discharged and which cannot.

For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.