Tax Liens Not Avoidable in Chapter 7 Bankruptcy Cases

Although some tax liabilities can be discharged in Chapter 7 bankruptcy, tax liens are not avoidable. If a taxing authority (e.g. Internal Revenue Service or NC Department of Revenue) has recorded a tax lien on a debtor’s property before filing for bankruptcy, the tax lien remains in place despite a debtor’s personal liability being discharged through bankruptcy. That tax lien may have to be satisfied before the property subject to the lien can be sold. In that sense, a tax lien is quite different than a judgment lien which may be avoidable depending on the relevant facts. Chapter 13 bankruptcy permits a debtor to provide for certain treatment of a tax lien. If your property is subject to a tax lien the attorneys at Sasser Law Firm will help you understand the alternatives available to you.