A tax lien is a lien that is made upon a piece of property in order to secure payment of taxes. Most people experience these when they are late paying taxes, which can either be owned on personal or real property. They also work differently than personal debts because the owner can also be held responsible for payments of taxes made by a previous owner. Whoever is the current owner of the home, they may be held personally liable for paying off back-taxes.
There are various methods that can be used to pay of these types of liens. Payments can often be made from the homeowner directly to the mortgage company. Most homeowners find it useful to utilize an escrow account. There are steps mortgage companies take before the homeowner is faced with liens. First, the homeowner is given a notice before legal actions are taken. Another option the homeowner can take is to sell the home along with the existing delinquent home taxes. When the home is sold, the liens in the home are usually included in the closing costs.
Proceedings for declaring tax liens vary from state to state. The consumer will be given a number of notices first before proceedings occur. If the note is not paid with a specified time period, then the property would be taken and sold. Sometimes, the lien will be offered to investors. In this event, the investors will receive a certificate in which the investor has a certain amount of time to go ahead with foreclosure proceedings (or to sale the home).
Tax liens can tarnish a consumer’s reputation by staying on their credit report for over 7 years. They can stay on the report even longer if they remain unpaid. They are usually collectible up to 6-10 years with the exception of some provisions. The IRS and the lien will be documented on a credit report and can be seen each time someone tries to apply for credit. Even though the IRS usually doesn’t negotiate credit ratings, there are some methods that consumers have used in the past to get better results.
Consumers are encouraged to request a credit report from the credit bureaus in order to get an accurate reading of the lien. The credit bureaus will do an investigation to validate a tax lien. If it cannot be verified, the bureaus will remove them. It is not a good idea to ignore tax liens, as they can be considered worst than filing bankruptcy to some financial institutions or creditors.
Article from articlesbase.com
More Taxes Articles
