Debtors with delinquent tax debt often worry about IRS tax liens during bankruptcy.
Facts about tax liens and bankruptcy:
1. Tax liens survive the bankruptcy discharge.
2. The tax liens that survive the bankruptcy discharge only apply to pre-bankruptcy property.
For example, if a debtor filing for bankruptcy has a tax lien on an old car that’s worth $1500, and the debtor sells the car, the IRS would be able to seize the proceeds. However, if the debtor purchased a car after bankruptcy worth $3,000, then sold it, the IRS would not be able to seize the money earned from that sale. If you are considering bankruptcy and have tax liens on your assets speak with a bankruptcy attorney about your options. A qualified bankruptcy attorney can help you create a plan on how to handle tax or other liens against your assets during bankruptcy.