How to deal with tax liens?

[chazdiezal]

I filed BK on 10/12, don't own a home, have a state tax lien from 05 which was paid and released and a tax lien from 09 which is still unpaid. How do I deal with the liens? Once paid do they go away? Do I need to motion the court to vacate it? Without owning a home do the lien become void with the filing of BK?
Thanks.

[biotechsolution]

The tax lien applies all property you have before your bk filing, nothing is exempt. The lien survives the bk so you will have to deal with the IRS after your filing to pay the tax. Once paid the lien will still be on your credit report but listed has paid. The courts won't vacate it. You may get the IRS or state to withdraw it after you paid it but I don't think a paid tax lien affects credit much.

[tcreegan]

Hi chaz,

How do I deal with the liens? Goes on Sched. D if it really is a lien, if it is just a tax debt it goes on Sched. E

Once paid do they go away? ....yup

Do I need to motion the court to vacate it? .....naw, you want to go the taxing authority and get a "paid in full" document and a lien release.

Without owning a home do the lien become void with the filing of BK? ....nope, since we aren't talking taxes that can be discharged, they have a life of their own and will survive the BK

Good luck w/ your filing,

Tom in Colo

[HHM]

Everyone else has given you the accurate advice. Basically, there is nothing to deal with.

Since the lien is for 09 taxes, (not dischargeable), the lien survives, as does the tax debt. You will simply need to pay it after your BK.

Note, you will bifurcate the claim on your petition, you will list a secured portion and an unsecured portion on your BK petition.

[chazdiezal]

So the actual past due taxes are the secured portion and the interest and penalties are the unsecured part?

[HHM]

Depends. It depends on the value of the assets. The tax lien covers the entire balance due.

For example, if you owe the IRS
$8,000 principal tax
$3,000 in P&I

And your total asset value (note, retirement accounts count toward this determination), $9,000, then $1,000 of the P&I would be secured, whereas, if the assets were only valued at $6,000, then $6,000 principal would be secured, and the rest of the principal along with the P&I would be unsecured.

In any event, it really doesn't matter, you will owe the ENTIRE balance principal, pen, and int, when you emerge from BK. Also, the lien can attach to future assets, so its a moot point really.