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
Hit with an income tax lien on a tax that bankruptcy can’t discharge? Bankruptcy is all the more valuable so that you can afford to pay off that tax. We’ve been talking about the effect of an income tax lien on an income tax that bankruptcy CAN discharge–legally write off. A tax lien can turn that tax from one you don’t … Read More
If you don’t file bankruptcy fast enough to prevent a recorded tax lien, sometimes filing a Chapter 7 still allows you pay less of that tax. The last two blog posts have been about the benefits of preventing an income tax lien recording by filing bankruptcy. That’s especially helpful if the tax at issue is an older one that can be … 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
The IRS’ or state’s recording of an income tax lien against you is dangerous. It often forces you to pay a tax that you could have discharged. If you owe income taxes, stopping the IRS or state record a tax lien can be a huge benefit of filing bankruptcy. How much of a benefit turns on details about the … 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
Chapter 7 provides limited help if your home is encumbered by a statutory lien. Instead Chapter 13 may significantly reduce what you pay.
Statutory liens on your home cannot be gotten rid of in bankruptcy like judgment liens often can. So it’s important to know what they are.
Because of Chapter 13’s much more powerful automatic stay, its ability to prevent judgment liens and tax liens is extremely valuable.
The recording of an income tax lien turns your home into collateral on the tax you owe. Stop the IRS/state from getting that huge advantage.
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
If the IRS or state has recorded a tax lien on your home, sometimes a Chapter 13 “adjustment of debts” can get rid of both the tax and the lien. Income Taxes that Can Be “Discharged” (Legally Written Off) If you owe an income tax debt, it can be discharged like most other debts. The tax debt just needs to meet … Read More
Which kind of bankruptcy to file depends on whether there is equity for the lien and whether the underlying tax can be discharged.