Will the “Automatic Stay” in Bankruptcy Stop Tax Liens in New York City?

If you have unpaid taxes to New York State or to the IRS these government bodies can put a lien on your property to collect. A property lien allows the taxing authority to potentially sell your home to repay the tax debt. So it’s quite common to hear questions in our initial client consultations about eliminating tax liens through bankruptcy. People want to know if bankruptcy or the “automatic stay” provision specifically, will stop the IRS or NY State authorities from collecting on a tax lien placed on their property. While the “automatic stay” will prevent most collection attempts against you, tax liens are a little bit trickier and aren’t guaranteed to be stopped by the “automatic stay” like most of your other debts.

For the most part the “automatic stay” will not prevent a tax lien if the lien is for property taxes that are due after the bankruptcy filing date, or if the lien is for taxes that can’t be discharged in bankruptcy like some income taxes. For example if you own a home in New York City and file bankruptcy before the due date for your property taxes the “automatic stay” will not dismiss the taxes you owe. The lien will remain in effect despite the “automatic stay.” A lien from unpaid income taxes will also almost always trump any benefits you would otherwise receive through the “automatic stay.” The IRS has special privileges your other creditors do not. You will need to consult an attorney about your specific tax lien problems to see if the “automatic stay” in bankruptcy can help.

The important thing to remember however is that even if a lien remains in effect when you file bankruptcy the burden of the lien will be dramatically reduced through the bankruptcy process anyway since all of your other toxic debt troubles will be eliminated. The “Automatic Stay” provision along with a detailed bankruptcy strategy can address the problems you’re having with a tax lien on your property but may not directly eliminate the lien. A qualified bankruptcy attorney will look at your financial situation as a whole, and will find you the necessary relief even if a tax lien remains in effect on your property. It’s a give and take situation. If you are underwater on your bills and facing a tax lien on your property it won’t hurt to get the free advice you need. Most people are amazed by how much they didn’t know about bankruptcy relief. If you live in New York City contact the Law Offices of William Waldner online or at 212.244.2882 to arrange a free consultation today. We only practice bankruptcy law and maintain a 99% Chapter 7 bankruptcy discharge record in New York City as of 8/31/16.

**** DISCLAIMER: This article is intended for educational purposes only. By reading no attorney-client relationship has been created. Prior results do not guarantee a similar result for future clients.