Does Filing For Bankruptcy Protect My Home From Income Tax Liens?

Getting hit with an income tax lien is very frightening. If you find yourself in a situation where you are having problems with your income taxes, please read on and speak with our experienced New York bankruptcy attorney to learn more about how our firm can help you through the legal process going forward:

What is an income tax lien?

When you are hit with an income tax lien, it is crucial you understand that there is nothing you can do to remove it from your home’s title. In some cases, bankruptcy can actually take care of this lien, but if you file too late, you may be out of luck. That is why it is always best to file for bankruptcy before you are ever hit with a tax lien. When you file for bankruptcy beforehand, the tax lien would instead turn into a debt that may be discharged by filing for bankruptcy.

How can bankruptcy protect me from an income tax lien?

When you file for bankruptcy, tax agencies and the IRS are barred from creating, perfecting, or enforcing liens. This is a sigh of relief for all those who are able to file before they place a lien on your home’s title. Once you file for bankruptcy, if you do it in time, there is a very good chance that this protection will last forever. Upon the completion of the bankruptcy process, the tax debt will most likely be discharged forever, therefore eliminating the need to record a tax lien in the first place.

Is Chapter 7 bankruptcy or Chapter 13 bankruptcy better for income tax lien protection?

Generally, Chapter 13 bankruptcy is considered the best way to protect yourself from an income tax lien. As long as the tax return for the tax debt was not due fewer than three years before you file for bankruptcy and you have not submitted your tax return to the IRS less than two years prior to filing for bankruptcy, you should be allowed to have your income taxes discharged through bankruptcy. When you file for Chapter 13 bankruptcy, you are protected from all collection activities by the IRS for up to 5 years, the payments you are required to make to all creditors are based on your workable budget, you are not required to pay continual interest or penalties on the tax, and more.

Contact our experienced New York firm

Bankruptcy, for many people, is a frightening endeavor. Fortunately, with the help of an experienced attorney, it does not have to be. If you require the services of an experienced Business Law or Bankruptcy attorney, contact the Law Offices of Allen A. Kolber, Esq. today to schedule a consultation and discuss your options. We will have your back every step of the way.