Bankruptcy and IRS Tax Liens

You can often get the IRS off your back through Bankruptcy. Thousands  have gone through one of the Bankruptcy chapters and regained their  freedom from the IRS.

FEDERAL TAX LIENS

A  federal tax lien is the government’s legal claim against all your  property. It encumbers real estate, bank accounts, and even personal  property.

How does a lien affect you?  The lien attaches to all property you own within the county of the  filing. This is especially burdensome if you have real estate. If you  sell your property you have to pay the lien plus the accrued interest.  Typically you cannot refinance your mortgage until you get rid of this  lien.

Once the lien is filed you will  have difficulty obtaining any further credit. The government can still  garnish your pay check and bank accounts.

CAN IRS DEBTS BE DISCHARGED IN BANKRUPTCY?

The  answer is often “Yes.” But even if the taxes can be discharged, the  lien still has to be addressed or the IRS will continue to collect.

IRS TAX LIENS AND CHAPTER 7

If  the IRS has filed a lien on your personal property and/or real estate,  you have a problem. Even if the debt is dischargeable the lien remains.  As to personal property that usually does not pose a problem unless the  property is valuable. In most cases, the lien can be released some time  after a Chapter 7 discharge. But if you own a home and you want to keep  it then it is a real problem. IRS liens have a life of 10 years and the  lien can be renewed. Most liens go through Chapter 7 unaffected so even  at the end of your Chapter 7 case; the lien would still have to be  addressed.

IRS TAX LIENS AND CHAPTER 13

As  stated above the underlying debt can be discharged but the lien  remains. However, IRS liens can often be avoided in whole or in part  depending on the value of the property. If the house is worth less than  is owed on the mortgage, the IRS lien is not worth anything. The Chapter  13 Plan can then be used to get rid of the IRS lien.

For  example, if the market value of the home is $100,000 and the mortgage  (s) debt and real estate taxes are more than $100,000 the lien can be  avoided in its entirety. Assume, however, there is a tax lien of $50,000  (and the taxes are dischargeable) and the value of the home is $100,000  while the mortgage and real estate tax debt is $90,000. Then, what? A  Chapter 13 can be constructed to pay $10,000 of the tax lien in full and  the remaining $40,000 as a general unsecured debt repaying, hopefully, a  very low dividend.

Another advantage to  a Chapter 13 is when there are non-dischargeable tax debts and/or tax  liens that cannot be avoided: you can repay the IRS debts over a period  of up to 5 years and put a halt to the interest and penalties.

NEXT STEPS

IRS  liens are complicated and hard to get rid of without professional help.  You usually have to deal with some recent taxes that must be paid in  full, the lien on your property, and some older taxes that can likely be  discharged in bankruptcy.

Robert  J Adams & Associates has helped thousands of good people, just like  you, get the IRS off their backs. Take advantage of our  Complimentary and confidential consultation today and see what we can do  for you.

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