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Lien Removal Strategies

 

If you have experienced a lien against your property, take heart. There are steps you can take to minimize the effect on your credit rating and get the lien removed once and for all.

Types of liens

Most of us have experienced the voluntary mortgage lien. In this instance, the bank or mortgage lender holds the title to your home until the balance is paid off and you become the sole owner.

Involuntary liens are not so easily discharged, and they can have an adverse effect on your credit history. These are frequently levied by governmental agencies and include property tax, federal tax and judgment liens.

I received a lien notice, now what?

Once you have received a notice of Federal Tax Lien from the IRS, you have two choices—dispute or payment. If you decide to dispute the lien, you must file the appropriate documentation with the IRS by the designated due date. Our attorneys are experienced in the field of tax disputes, and we can help you fight for your rights if you feel you’ve been unjustly charged.

If the lien action is correctly filed and legal, your next goal is to remove the lien from your record as quickly as possible. Evidence of a tax lien on your credit history may make it hard to obtain future loans or credit cards.

How to get a tax lien removed

A legitimate tax lien can be withdrawn in three ways.

Pay off the full amount due: you must also be current on all tax filings for the last three years and be following all estimated tax payment or Federal Tax deposit deadlines, if applicable.

Enter into a Direct Debit Installment Agreement with the IRS: this causes the IRS to “release” the lien but for lien “withdrawal” you must also meet certain other criteria.

  • Owe less than $25,000
  • Set up your agreement to pay the full balance within 60 months or before the statute of limitations runs out
  • Make three direct debit payments in a row
  • Obey all other IRS filing rules and have no defaults on record for this or past direct debit agreements

Get a Settlement: this reduces your tax bill through the ‘offer in compromise ‘ process and then you pay the reduced settlement amount.

What happens after my lien is withdrawn?

Once your lien is withdrawn, you may be concerned with removing all evidence of it from your records. Credit rating agencies are permitted to report your lien indefinitely, although most drop it off their reports after 15 years. Even if your lien is paid in full, it can continue to show up for seven years after payoff date.

However, recent changes in the way liens are reported make it less likely that they’ll show up on your credit scores, and the three major credit bureaus (Experian, Equifax, and TransUnion) have voluntarily decided to remove liens from their reports. Other consumer credit agencies that track credit histories for specialized enterprises looking into insurance claims, medical records, employment and housing leases may need to be notified directly of your lien withdrawal.

Call our team today

As you can see the lien removal process can be quite complex. Let the experts at Len Stauffenger, Esq. help you manage lien disputes, direct debit installment agreements and lien withdrawals. We can make sure your credit score remains unblemished and get you the tax relief you need.