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What Happens to a Tax Lien When Bankruptcy is Filed?

Posted By Allmand Law Firm, PLLC || 19-Jul-2013

Your Tax Lien After Your Bankruptcy is Filed

When you file bankruptcy, the automatic stay goes into effect which stops collection attempts from creditors. Yet, this may have a different effect on a tax lien depending on your situation. A tax lien is when a taxing authority, such as the Internal Revenue Service (IRS) or state government, places a lien on your property for failing to pay outstanding taxes due.

The lien allows the taxing authority to use your property to satisfy taxes due after selling your property. You may have a lien placed on the property in question if you owe property taxes. Or, the taxing authority who is owed taxes may take additional steps to get a lien if you owe state or federal income taxes. When it comes to bankruptcy, you may need to determine whether the tax debt in question qualifies for discharge.

This can be complex situation depending on what type of tax debt you owe, how old the debt is, and when you file your petition. In some cases, you may file for protection before the lien is issued against you. In this case, if a lien is issued it violates the automatic stay. Tax debt may be eligible for discharge but it depends on whether it meets qualifications according to the bankruptcy code. Getting the debt wiped out in bankruptcy may depend on when it was due and whether it has been accessed by the IRS. Discuss your situation with an experienced Dallas-Fort Worth bankruptcy attorney.


Categories: Debt and Tax Relief
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