How Creditors Get Your Assets
Opening a business is a risky venture. However, a comprehensive asset protection plan can eliminate or significantly reduce these risks, and shield business and personal assets from the claims of creditors, should something go wrong. (Asset protection planning is just one aspect of business formation; see our detailed discussion of starting a small business.)
In order to best accomplish this goal, you need to be familiar with the nature of the debtor-creditor relationship, including the kinds of "liens" creditors can place against your assets. These liens have varying implications and significance in different types of proceedings between debtors and creditors.
Creditors with liens are termed "secured creditors." If they are not paid, secured creditors can, in effect, seize your assets to satisfy debts they are owed. Understanding the types of liens and how they work will allow you to effectively battle them in court, and possibly invalidate or eliminate them altogether.
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