Photo by Joshua Sukoff on Unsplash. An income tax lien creates challenges, so try to file bankruptcy to prevent one. Otherwise, bankruptcy can often help deal with a tax lien. This blog post continues a series about the smart timing of your bankruptcy filing. (It was interrupted by two blog posts updating federal unemployment benefits.) The last one in this … Read More
Photo by Bekky Bekks on Unsplash. You can discharge income taxes in a Chapter 13 “adjustment of debts” case as you can in a Chapter 7 “straight bankruptcy.” Here’s how it’s different. Our blog post of three weeks ago introduced the importance of timing your bankruptcy filing right. We gave a list of 15 examples where timing can make a … Read More
Photo by Olga DeLawrence on Unsplash. You’re considering bankruptcy, and you have some unfiled tax returns for the IRS and/or your state. Should you prepare and file them, and when? Our last two blog posts have been about what you should and should not do before filing bankruptcy. These are important to consider even if you hope to avoid bankruptcy … Read More
Chapter 13 is better with a recorded tax lien because it protects you permanently from the IRS/state. And saves you big money on that tax. Last week’s blog post was about dealing with a recorded tax lien by filing a Chapter 7 “straight bankruptcy” case. Usually the IRS’ or state’s recording of a tax lien against you effectively requires … Read More
Prevent an income tax lien by filing under either Chapter 7 or 13. But if the tax qualifies for discharge Chapter 13 is slower and riskier. Last week we showed how detrimental the recording of an income tax lien can be for you. It can turn a tax that you could fully discharge (legally write off in bankruptcy) into … Read More
Chapter 7 can sometimes help you deal with unaffordable income tax payment plan. But Chapter 13 is often a better way to escape a tax mess. Tax Agreement Payments Too High We laid out the problem last week. You’d entered into a monthly payment plan with the IRS or your state because you couldn’t pay what you owed. But … Read More
Do you have a 2nd or 3rd mortgage, owe property taxes, or have an income tax lien on your home? Chapter 13 may be much better than Chapter 7. The last two blog posts were about situations in which a homeowner is current on the mortgage but has other debts on the home. We showed how Chapter 7 “straight … Read More
Because of Chapter 13’s much more powerful automatic stay, its ability to prevent judgment liens and tax liens is extremely valuable.
Chapter 13 handles a tax lien on a home especially well when the home has enough equity to cover some but not all of the tax lien amount.
Chapter 13 takes away the danger of a tax lien encumbering the equity in your home. If the IRS or your state tax collector records an income tax lien against your home, and you want to keep the home, sometimes through bankruptcy you don’t have to pay the tax. If there’s no equity at all in the home to … Read More