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Discharging Tax Liens in Bankruptcy

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  • 04-04-2007, 02:55 PM
    seniorjudge
    Discharging Tax Liens in Bankruptcy
    In a consumer bankruptcy, is the debtor relieved of state tax liens? Federal tax liens?

    (I will be the first to admit that I know nothing about bankruptcy; if I haven't given you enough info, ask me. Thanks.)
  • 04-06-2007, 08:21 AM
    Mr. Knowitall
    Re: Discharging Tax Liens in Bankruptcy
    Liens normally survive bankruptcy. If the lien exceeds the value of the property (or the remaining equity after considering the amount of other liens which have priority) they may be partially dischargeable. Tax liens are usually paid off in full as part of Chapter 13 bankruptcy plans.

    The tax underlying the lien may survive bankruptcy even if the lien is wholly or partially discharged, for example if it results from nonfiling of tax returns or a "priority tax", although it may be possible to work out an offer of compromise with the taxing authority to reduce any underlying tax obligation.
  • 04-07-2007, 08:45 AM
    seniorjudge
    Re: Discharging Tax Liens in Bankruptcy
    Thanks, MKIA!
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