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What are the possible ways to get an IRS tax lien removed from our property after Chap 7 bankrupsy (besides paying it off?)

Houston, TX |

I understand that with a Chapter 7 bankruptcy, provided our IRS taxes are dischargeable (qualify with the 3-year/2-year/240-day rules) they will be gone as with other dischargeable debts, however the lien they placed on our house will not go away. I have 3 questions. 1. Is there any way to get this removed besides paying off the amount owed in payments or an offer in compromise, etc., even after the BK has been filed? 2. If there is no way to have it removed how does one go forward with making an offer to pay it somehow to get it removed over time if the debt is gone? 3. Is the amount of the lien affected by how much equity there is in the property at the time of the BK filing? Is that then the amount of the lien and what would need to be paid to have it removed?

Attorney Answers 2


  1. A line can only persist for a valid underlying obligation. If the debt was discharged by an adversary action in the bankruptcy (the way it should be done), then you can do a couple of things. First, you can send copies of the order discharging the tax to the credit bureaus, and ask them to remove the lien from your public information report. Secondly, you can file a suit for summary removal of the lien. as a practical matter, if the Justice Dept. attorney handling the matter wants to be difficult, he can be, and you may have to offer something for the non-existing debt to get an agreed order of removal of the lien. However, for most folks, the removal from credit bureau reports is the goal, and you can get new loans by showing the order discharging the debt.


  2. The federal tax lien survives the bankruptcy even though the underlying debt has been discharged. It continues in full force and effect as to property you owned on the date you filed for bankruptcy (generally exempt property). The lien will expire when the collection statute of limitations expires. To get rid of it sooner you can negotiate with the IRS to pay them something less than the debt to do so-- generally the value of the exempt property

    I suggest you hire an attorney familiar with both bankruptcy and tax law to assist you.

    The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than the educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question. To the extent additional or different facts exist, the response might possibly change. Attorney is licensed to practice law only in the State of California. Responses are based solely on California law unless stated otherwise.

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