Can I Eliminate Tax Liens Through Bankruptcy?

suburban residential home

You may have a load of back taxes that you are anxious yet struggling to pay off. You may attempt to pay them off before any consequences set in, such as a tax lien; yet you may feel as though it is impossible to accomplish without outside assistance, namely without a bankruptcy filing. But you must understand that only a select few types of debt are eligible for elimination through bankruptcy in the first place. Read on to discover the possibility of eliminating tax liens through a bankruptcy filing and how a seasoned Rockland County bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq. can help you curb this consequence.

What are the possible consequences of unpaid back taxes?

First things first, back taxes are considered to be the federal, state, and/or local taxes you only partially paid or otherwise left fully unpaid in the year in which they were due. While your current financial standing may not afford you the means to pay your yearly income taxes, the Internal Revenue Service (IRS) may not halt its disciplinary actions against you. Without further ado, the possible consequences the IRS may inflict for unpaid back taxes read as follows:

  • The IRS may inflict significant penalties and interest accruals on the back taxes you owe.
  • The IRS may seize your property and assets to compensate for the total amount of taxes owed.
  • The IRS may garnish your wages or levy your financial accounts to seize the total amount of taxes owed.
  • The IRS may impose federal tax liens to inform creditors to inform other creditors of its legal claim against your property.

Is it possible to eliminate tax liens through my bankruptcy filing?

To reiterate, one of the possible consequences of unpaid back taxes is having tax liens placed against your property. That said, you may be able to avoid this altogether by filing a timely bankruptcy petition. This is because your filing may bar the IRS from pursuing any collection activities. Further, you may be eligible to have your tax debts discharged during your proceedings; but so long as you meet certain criteria enforced by the New York bankruptcy court.

You must understand, however, that you may still be held responsible for paying your back taxes if the IRS had imposed a tax lien on your property before the date on which you filed for bankruptcy. For example, if you choose to sell your house post-bankruptcy, you may be obligated to pay the tax debt so to have the lien removed. Of note, this is unless you are doing a short sale of your house.

There may be many benefits in a bankruptcy filing, so long as it is first carefully considered. So please seek the assistance of a competent Rockland County bankruptcy attorney from The Law Offices of Allen A. Kolber, Esq. We look forward to having a conversation with you.