What Are Tax Liens, And How Do They Affect Your Property?

Will A Tax Lien Affect Your Credit Score?

Yes! A tax lien can significantly lower your credit score. This will make it harder to get loans or other lines of credit approved in the future. Lenders may view a lien as a financial risk and it may lead them to not approve your loan. When your tax lien is finally lifted, you may need to do a lot of work to get your score back up to where it was prior to your lien being filed.

What Happens If You Don’t Settle Your Lien?

If you do not pay your overdue taxes within a certain period of time after being given a lien, you may risk the possibility of a foreclosure. A foreclosure is a legal process in which a lender will take ownership of a property and force its sale to recover an unpaid debt. With a foreclosure due to a tax lien, the sale of the property will fund the tax lien first before the remaining money from the sale is given to the owner. You may also be responsible for paying interest and penalties during this time which will increase the total amount owed.

What Happens If You Go Into Foreclosure Because Of A Lien?

If your debt remains unpaid, the government who placed the lien, or the investor who acquired your tax lien, may choose to initiate foreclosure to help recover any tax that is owed. The forced sale of the property will be used to help pay back the debt you owe even if it is your primary residence. Going into foreclosure can reduce the value of the property. A property that is in foreclosure is less attractive to potential buyers and can reduce its market value. Many buyers are unwilling to deal with the complications that come with clearing a lien on a foreclosed property. When you have fewer buyers interested in the property and it doesn’t sell, the listing price of the property will be dropped to help gain interest. Once the property is sold, the lien amount will be deducted from the proceeds of the sale. Once that amount is deducted, you will be left with any of the profit that is left over. Any interest and penalties will also be deducted from the profits of the sale.

What Will Happen When You Settle A Lien?

To resolve a tax lien, you must pay the tax owed in full or you can negotiate a settlement with the tax authority that issued the lien. Once you pay that debt back, the lien will be released and your property’s title will be cleared. You will again be able to have the opportunity to sell your home or renegotiate the mortgage of the property. It is important to note that the lien will not be removed right away when you make your payment. The government will lift your tax lien within 30 days of your payment. Though your lien will finally be paid off and cleared, the history of the lien will still be a public record. In the future, when you are looking to purchase a new home, choose to renegotiate your home mortgage, or try to open new loans, creditors and lenders will still be able to see that you accrued a tax lien in the past. The lender or creditor may still view your past tax lien as a red flag even if it was paid off. This may result in the lender or creditor not approving your loan or mortgage request.

Are There Different Ways A Lien Can Be Paid?

There are a few different ways you can go about paying a tax debt.  The fastest way to resolve your tax lien is to pay off the total amount you owe in full. This also includes any penalties and interest that you accrued. There are also some authorities that will allow you to set up a payment plan in order to pay off your debt. These payment plans are usually monthly installment agreements. In most cases, the property owner will have a set period of time to pay off the lien before the property can go into foreclosure. This period can be anywhere from six months to three years. Making these monthly installments will show the government that you are complying and working towards paying off your debt. This will not immediately remove the lien, but it will be marked as “in compliance”. Once your lien is paid off, the government will release the lien within 30 days of your payment and your title will be finally clear.

Facing A Lien And Don’t Know What To Do?

Do you have unpaid tax debt? At Jump Legal, we understand that unpaid tax debt and any other type of debt can be very stressful. We are here to reduce your stress and show you all the options that are available for you. We have helped many individuals reduce and deal with the debt that they owe. The attorneys at Jump Legal are experts in bankruptcy and debt solutions. Not only can we find the best options for your situation, but we can also end creditor harassment. Our services are affordable and free of hidden fees. We are here to help you achieve a debt-free life.

Schedule Your Consultation Today!

Give Jump Legal a call today to schedule a free consultation. Our attorneys are ready to speak with you and talk you through our process. We will help you take your first steps towards a debt-free life. We are experienced and knowledgeable when it comes to tax debt and other debt situations you may find yourself dealing with. Whether you are a small business owner or an individual trying to get their finances together, we can help you find the right solution to your problem. Let us help you if you are tired of getting calls from collectors or stressing over unpaid bills. Look no further than Jump Legal to help you get your finances in order. We are ready to help you get to a debt-free life and be able to finally relax. Give Jump Legal a call today!