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Tax Liens & Bankruptcy's Automatic Stay

Discharging income taxes in bankruptcy will not remove a tax lien which existed prior to the filing of a bankruptcy case. Such a lien is still valid and may not be discharged unless the lien is paid in full or some other resolution is negotiated with the IRS. To determine if any delinquent taxes are dischargeable requires a complicated legal analysis and therefore the assistance of a qualified and experienced bankruptcy attorney.

A tax lien is a lien placed on real and personal property by a taxing authority such as the IRS or the State of Florida for the failure to pay taxes. Once the lien is in effect, the taxing authority may seize and take the subject property to sell and satisfy the underlying tax debt. While property taxes always are encumbered by a lien on the real property to which the taxes apply, other taxes such as income taxes involve certain, specific requirements to obtain and attach a lien.

The automatic stay does not apply to tax liens if:

  • the lien is a property tax lien for taxes due after the bankruptcy filing; or
  • the lien is for taxes that may not be discharged in the bankruptcy and the property to which the liens attach is exempt from the bankruptcy estate; or
  • the lien is for taxes that may not be discharged in the bankruptcy and the property to which the liens attach is abandoned by the bankruptcy trustee and returned to the debtor.

Any property taxes for a parcel of real property, even if not yet due, allow the state and county taxing authority to have a lien on an individual's home, despite the application and effect of the automatic stay.

If the IRS obtains a tax lien for 2015 unpaid taxes on a piece of real property which the trustee intends to liquidate or sell, despite the fact that the tax debt is nondischargeable, any tax lien is invalid and violates the automatic stay because the property belongs to the bankruptcy estate rather than the debtor.

If the State of Florida obtains a tax lien for 2015 unpaid taxes on a piece of personal property which the debtor claims in its entirety as exempt property, or the bankrup[tcy trustee abandons such property to the debtor, any tax lien is valid because the property no longer belongs to the bankruptcy estate.

At Loan Lawyers, our South Florida consumer rights and debt defense attorneys help individuals with problems related to the payment of their debts. The experienced South Florida defense attorneys at Loan Lawyers are here to help if you have any property encumbered by a federal tax lien and negotiate some final resolution. We're also here to help if your financial position necessitates the consideration of a bankruptcy case filing under Chapter 7, 11, or 13. To schedule a free consultation at any of our three conveniently located offices, contact Loan Lawyers today by calling (888) FIGHT-13 (344-4813).