Blanket Lien

DEFINITION of 'Blanket Lien'

A lien that gives the right to seize, in the event of nonpayment, nearly all types of assets and collateral owned by a debtor in order to satisfy the debt. A blanket lien gives a creditor a legal interest in all of the debtor's assets. Blanket liens provide maximum protection to lenders, but minimum protection to borrowers. Borrowers can lose everything they own if they default on a debt subject to a blanket lien.

BREAKING DOWN 'Blanket Lien'

A lien usually only gives the creditor the right to a single asset. For example, if you borrowed money to purchase a car and stopped making the car payments, the lender could only put a lien on the car. If you didn't catch up on your payments within a certain time period, the lender could take the car. Taxing authorities can also place liens on assets when individuals or companies don't pay their taxes. If you became delinquent on your federal income tax liability, the Internal Revenue Service would effectively have a blanket lien on all of your assets. The IRS has the power to seize almost anything to satisfy unpaid taxes, though this tactic should only be used as a last resort.

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    Find out about the steps an investor must take to invest in tax liens, along with the potential benefits of doing so. Read Answer >>
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