Friday, September 25th, 2009

Will tax liens be removed from credit after bankruptcy?

credit bankruptcy
CC asked:


I am helping a family member get her life back on track. It looks like her best option may be bankruptcy.

If there is an unsecured, unpaid federal tax lien on her credit, will it be removed when she declares bankrupcy, or is it on there forever (unless she pays it)? I do not know how the situation came about, but the liens were placed against a home that was sold 10 years ago.

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This entry was posted on Friday, September 25th, 2009 at 12:00 am and is filed under Credit Score Information. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

4 Responses to “Will tax liens be removed from credit after bankruptcy?”

j-man Says:
September 25th, 2009 at 1:32 pm

Even after it is paid, it will stay on there. If bankrputcy is filed, the lien will stay on there. And by filing bankruptcy, that probably will not even relieve your family member of that tax lien as they can withhold future tax refunds.

totolalo@sbcglobal.net Says:
September 28th, 2009 at 2:57 am

A TAX LIEN WILL NOT BE REMOVED UNLESS YOU PAY IT OFF
IT IS BEST THAT YOU PAY IT OFF AND AVOID ACCUMULATING PENALTIES AND FINES IT IS NOT GOING AWAY.EVEN AFTER YOU PAY IT OFF IT WILL STAY IN YOUR CREDIT REPORT FOR 11 YEARS.YOU MAY TRY “DEALING “WITH THE IRS TO TRY TO REDUCE THE AMOUNT OWED OR TRY LOOKING FOR A COMPANY THAT DEALS WITH THIS KIND OF SITUATIONS
THEY CAN DEAL WITH THE IRS BUT THEY CHARGE YOU A FEE FOR THEIR SERVICE….GOOD LUCK

wartz Says:
September 29th, 2009 at 10:56 am

A federal tax lien is not normally placed on a particular piece of property but attaches to all the taxpayer’s property or rights to property.

If the lien is over 10 years old and was not extended and refiled, it is self-releasing and states so quite clearly. Credit reporting agencies don’t seem to pick up on this. You should get a copy of the notice of lien and determine if it is still valid before considering bankruptcy. You can also call IRS at 800-829-1040 and ask if the account is still on the books.

Also, IRS is required to send all taxpayers a balance due notice at least once a year stating what type of tax is owed and the current balance due. The notice does not contain any threatening wording, just the balance due and a polite request for payment. If your family member has not received such a notice in the past few years, that means the balance due is zero.

I am an enrolled agent, licensed by the US Treasury Department to represent taxpayers the same as CPAs and attorneys and specialize in taxpayers who have balance due problems. If you have any questions you would like to ask outside this forum, you can email me through my profile.

Lesley Says:
September 29th, 2009 at 5:39 pm

Were the tax liens not paid when the house was sold? If not they don’t just magically go away. Your family member should see a bankruptcy attorney about the possibility of getting those liens removed. SOME tax debt is dischargeable if it’s over three years old when they filed bankruptcy, but it depends and the best person to talk to about that is a bankruptcy attorney.

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