Blanket Lien

Posted in Finance, Accounting and Economics Terms, Total Reads: 439
Advertisements

Definition: Blanket Lien

It is a type of blanket that is given to creditors to safeguard their interests against any default by debtors. Under blanket lien if a debtors defaults in paying back the loan, the creditors have a right to seize all kinds of assets and collaterals owned by the debtors.


The legal interest given to creditors in all the assets of the debtor acts as a safeguard against default by debtors. Hence blanket lien gives maximum protection to the lenders and minimum protection to the borrowers.


Remember it is different from lien, where creditor has a right over a single asset only! Unlike lien agreement on an automobile, which provides rights to the creditors to repossess the automobile in the event of non-payment by debtor, a blanket lien allows the creditor to choose any of the items, listed as a security interest for the loan, to be used to retire the debt. The debtor has no say in which item to choose.

 

Hence, this concludes the definition of Blanket Lien along with its overview.

Advertisements

Browse the definition and meaning of more terms similar to Blanket Lien. The Management Dictionary covers over 7000 business concepts from 6 categories.

Search & Explore : Management Dictionary



Share this Page on: