Archives for November 2012

Creditors Will Put A Lien On Your Property

Many creditors will put a lien on your property.  They are trying to ensure they get paid for the debt you owe.  There are judgment liens when you lose the lawsuit.  And there are tax liens when you don’t pay your income taxes.  A lien against your property creates many problems for you.

A lien can be placed on just about anything you own.  Usually liens are placed on your home and/or cars.  They make it hard for you to sell the property.  They also give the creditor the right to take your property and sell it.

A lien on your house gives the creditor the right to foreclose on your house.  Even if the creditor does not foreclose the lien causes other problems.  If you try and sell your house the creditor gets paid.  If you try to refinance your mortgage the creditor gets paid.

Liens are very costly.  Some creditors obtain the lien and wait.  They sit back until you to try to sell or refinance.  The whole time the debt is getting bigger with interest.  That $5000.00 credit card debt is now $7000.00 five years later.

Chapter 7 Bankruptcy will prevent liens from attaching to your property.  However, once attached liens are not discharged in Bankruptcy.  A lien may be able to be removed during the bankruptcy process.  This generally requires additional procedures.  Creditors will put a lien on your property, it’s a cheap way for them to get paid.

Income Taxes After Your Home Foreclosure

You may have to pay income taxes after your home foreclosure.  Currently many can escape foreclosure with just the loss of their home.  Starting in 2013 foreclosed homeowners may also be paying taxes to the IRS on the forgiven debt.  Most tax debt is not dischargeable.

Current federal tax laws generally do not tax consumers for forgiven debt from home foreclosures.  The current law will expire at the end of 2012.  If the law is not extended, many consumers will pay federal income taxes on forgiven foreclosure debt.  Think paying taxes on an extra $30,000 to $100,000 of income.

Mortgage modifications were supposed to help.  I have seen very few success stories.  You make too much money or you make too little money. Sorry, but thanks for trying.

The only real mortgage relief is Chapter 7 Bankruptcy.  Take care of the mortgage debt.  Avoid paying taxes on forgiven debt.  Clean up your other debt at the same time.

The Bankruptcy laws have been around longer than the current tax law.  Rely on a remedy that has staying power.  If you are in a current foreclosure you need to act fast.  Contact a local Bankruptcy Attorney to learn more.  Don’t pay income taxes after your home foreclosure.

Definition of Creditor

A Creditor is someone you owe money to.  A secured creditor has a lien on your property to make sure you pay the debt.  An unsecured creditor does not have an interest in your property.  An unsecured creditor can become a secured creditor if they sue you and win.

What is Forgiven Debt

Forgiven Debt, or debt forgiveness, is when your creditor gives up.  They charge off the debt and take the loss.  They report the loss on their tax returns.  Their loss becomes income to you.  The IRS will tax you on forgiven debt.

When you settle a debt for less than you owe debt is forgiven.  You will owe taxes on the amount of forgiven debt.

What is a Tax Lien

A Tax Lien is a legal right the government has in your property.  If you fail to pay your income taxes a tax lien may be placed on your property.  The government can take your property and sell it to pay your taxes.

Taxing agencies are not required to file a lawsuit first.  They just need to file the lien in the court and they have a right in your property.

Federal tax liens affect your property wherever is it.  The federal tax lien may be filed in the state in which you live.  Your property in another state is still affected by the lien.  State tax liens are similar to federal tax liens

What is a Judgment Lien

A Judgment Lien gives a creditor a right in your property after winning its lawsuit.  It helps the creditor collect what you owe.  If you don’t pay you may lose your property.

A judgment lien is created after you have been sued.  If the creditor wins its case it can obtain a certificate of judgment.  The certificate is filed in the common pleas court.  Your creditor now has an lien on your property.

Your creditor may try and sell the property or foreclose on it.  Your creditor may wait for you to try and sell the property.  When you do try and sell the property the creditor with the lien will need to be paid.