A bankruptcy filing has the potential to stop tax lien enforcement, but only if certain conditions are met. As a general rule, if the IRS or Utah state taxing authorities have already recorded a lien, it will survive the bankruptcy – unless the amount due is paid in full. In many cases, this is only achievable with a Chapter 13 case.
If you have a recorded tax lien against your home or other property, the experienced bankruptcy attorneys at the Law Office of Davis & Jones, P.C., can help you develop a strategy to deal with the situation. Our legal team has helped over 20,000 Utah residents resolve their debts. We’re here to do the same for you.
Challenging a Recorded Tax Lien
In the right circumstances, an attorney can ask the Utah bankruptcy court to release a recorded tax lien. If any of these apply, you could be released from your obligation to pay the lien:
- The lien wasn’t recorded properly
- The tax debt was assessed more than ten years ago
- The taxes owed are dischargeable and the lien is attached to property with no value
However, even these conditions may not achieve the release of a lien in Chapter 7 bankruptcy. Since most Chapter 7 cases are no-asset bankruptcies, resolving the debt through liquidation is often impossible. In contrast, filing a Chapter 13 claim can stop tax lien enforcement.
Tax Liens in Chapter 13 Bankruptcy
In a Chapter 13 bankruptcy, liens are included in the debt repayment plan. However, Chapter 13 allows you to freeze the tax claims at the time of filing. You may be able to reduce the amount owed based on the value of your assets – a process known as lien stripping.
Lien stripping is only possible with a Chapter 13 bankruptcy case in Utah, and it effectively turns debts that are not fully secured into unsecured debt. As such, the amount owed joins the other unsecured claims in the repayment plan. Depending upon your specific financial situation, you may only have to pay a small portion of your unsecured debts to receive a Chapter 13 discharge.
Talk to a Bankruptcy Attorney Today
The process of filing for Chapter 13 bankruptcy is complex – and if you want to stop tax lien enforcement, the challenges become even greater. For that reason, you’d be wise to work with an experienced bankruptcy attorney.
At the Law Office of Davis & Jones, we’ve been helping Utah residents get on better financial footing since 1995. Our legal team has dealt with all types of tax debts, and we have an in-depth knowledge of state and federal bankruptcy law. Our attorneys can answer your questions, explain your options, offer expert advice and guide you through every step of the bankruptcy filing process.
Are you in need of debt relief? For a free consultation to discuss Chapter 13 bankruptcy and how our law firm can help stop tax lien enforcement, contact us online or call our office in Salt Lake City, Utah, or St. George today.