![]() ![]() ![]() When the debtor filed a petition in bankruptcy, the secured creditor used "the threat of possession, rarely carried out, to extract more than he would be able to if he did foreclose or repossess." See Matter of Noggle, 30 B.R. Prior to the adoption of the Bankruptcy Code, financing companies would take a security interest in property essential to the debtor's survival, not because of the intrinsic value of the collateral, but because of the leverage it gave them in a bankruptcy proceeding. Prior to enactment of the Code, Congress made a finding that substantial creditor abuse occurred in the area of these non-possessory, non-purchase-money security interests. ![]() The liens granted are referred to as "non-possessory non-purchase-money security interests." The Bankruptcy Code deals with these liens under ยง522(f). Journal Article: It is common for consumer debtors to borrow money, generally from small loan companies, and grant them a lien in existing household goods to secure repayment of those loans.
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