FAQs About a Tax Lien on Loans

Tax lien loans may be sought by debtors who wish to avoid having IRS debt on their credit report. A tax lien is imposed by the IRS on a debtor who cannot pay taxes at the time they are due.

What Is a Tax Lien?

When past due taxes are owed and have not been paid, the IRS can impose a tax lien on the debtor business or individual. The IRS places a lien on the debtor's property until all taxes, fees, and penalties are been paid.

How to Settle a Tax Lien?

If you can, the easiest way to settle a tax lien is to pay the bill. Tax liens can also be removed when a repayment agreement is established between the IRS and the debtor. The IRS will sometimes go into a repayment agreement where installments of the debt are paid each month until the balance has been paid off. Penalty fees may be included in the payment arrangement.

How Will a Tax Lien Affect Property?

Tax liens can have a negative effect if the debtor intends to sell the property to which they are attached. The IRS sometimes offers lien subordination. Once the IRS does this the tax payer can often then secure a loan. The IRS would then have access to any appreciation on the property, even though they gave up the right first priority for repayment of the debt.

In extreme cases of tax debt, the IRS may turn to property seizure. When the IRS believes that value can be obtained from your assets, the IRS will determine how much equity is in a particular item. Depending on the amount of equity you own in the vehicle, your property could be taken and sold at an auction as payment for your debt. Property seizure is not common because property is often not valuable. However, if you receive a notice of property seizure, get legal advice about your options as soon as possible to avoid property sale by auction. You may be able to stop the action by filing for bankruptcy or taking other actions.

Getting Legal Help

An experienced attorney who handles bankruptcy and debt relief can assist you with assessing your financial situation to determine your best course of action. Tax liens and other debt can make life miserable. Getting experienced legal counsel to give you advice is a good step toward financial freedom.