What is a Lien Creditor? A Comprehensive Guide to Legal Definitions
Definition & Meaning
A lien creditor is a type of creditor who has a legal claim or interest in a debtor's property. This claim is established through various legal means, such as attachment or levy. The term can also refer to specific roles in bankruptcy or insolvency situations, including:
- An assignee for the benefit of creditors, starting from the time of assignment.
- A trustee in bankruptcy, effective from the date the bankruptcy petition is filed.
- A receiver in equity, beginning at the time of their appointment.
Legal Use & context
The term "lien creditor" is primarily used in civil law, particularly in cases involving debt recovery and bankruptcy proceedings. It plays a crucial role in determining the priority of claims against a debtor's assets. Users can often manage related forms and procedures themselves by utilizing legal templates available through platforms like US Legal Forms.
Real-world examples
Here are a couple of examples of abatement:
Example 1: A bank that has obtained a lien on a property due to an unpaid mortgage is considered a lien creditor. If the borrower defaults, the bank can initiate foreclosure proceedings.
Example 2: In a bankruptcy case, the appointed trustee becomes a lien creditor as soon as the bankruptcy petition is filed, allowing them to manage the debtor's assets for the benefit of creditors.