How Lien Treatment Varies In Chapter 7 Bankruptcy

All liens are not treated equally according to Chapter 7 regulations. Tax liens owed to governmental authorities are given a preference in payment. In terms of the Code, this preference is known as priority status, and entitles holders of priority to status to first payment upon secured debts. Examples of priority liens include tax liens, statutory hospital liens, judgment liens for restitution based on crimes committed against federal or state governments. In addition, secondary priority status includes most common secured debts, which are entitled to payment from the estate before general unsecured creditors.