Desperate for a clean start

[southernbelle]

Since my chapter 7 case is closed and I'm still dealing with tax issues, the need to start over with a clean slate keeps me awake at night. I'm considering selling my house to pay the taxes in full and moving into a rental or apartment. The assumption is that I can clear enough from the sale of the house to pay everything off because if I don't, I'll still owe, but I'll be closer to paying everything off in the end. I don't make enough for a chapter 13 to pay the taxes in full and if the OIC with the IRS falls through, selling the house might be the only way to keep the IRS from hounding me for the next 10 years. My peace of mind and sanity is at stake and I'd rather be broke than harassed for the next 10 years.

Anyone have any experience with trying to sell a home when the liens can't be paid in full throught the sale? Is it possible?

[OhioFiler]

The lien keeps the property from being transferred until it is satisfied.

[southernbelle]

I thought it would be possible to satisfy the lien through the sale of the property. Would I have to get special clearance to do something like that? Sorry I guess I have it confused.

[Pizza]

The biggie is how much you are selling for. The lien will eat away at the proceeds, and in most cases, realtors and banks won't touch a house with a lien because the amount goes into escrow (that and they have a lot of other options as many empty homes as there are and don't want a 'problem house' to deal with).

The amount of the lien also continues to grow as interest accrues over time. You will probably need the help of a real estate attorney for a cut and dry answer, but if you cannot dissolve the lien, you will have to pay it to sell your house one way or another.

After a certain number of years (varies by state), the lien will also be invalid unless there is a renewal.

[southernbelle]

In my case, the value right now (or what I think I could get for it) would be about even or maybe $10k-$15K less than the total liens I owe. I wasn't looking to get anything out of the deal and was possibly thinking of an alternative to paying back the debt by selling the house outright and maybe chipping away at the total amount owed as a possible solution. I think you're right though, I will contact a real estate atty to see what he/she might have to say about it. Thanks again.

[Pizza]

I can see the stress that the lien (especially being a tax lien) is causing. You will definitely put your mind at ease by speaking to a professional who may offer advice in this situation. Good luck.

[Iwantmyname]

I've been on this board about a year of so (this is a new username) and have seen again and again that many people who file for a chapter 13 are forced into a chapter 7 after a while, because they cannot pay ther chapter 13. Please see a lawyer (a real one) about this. I am sure you have looked into forclosure.

[AngelinaCatHub]

I've been on this board about a year of so (this is a new username) and have seen again and again that many people who file for a chapter 13 are forced into a chapter 7 after a while, because they cannot pay ther chapter 13. Please see a lawyer (a real one) about this. I am sure you have looked into forclosure.

No "Iwantmyname" she has already had her bk7 and is discharged.

Now 'Southernbelle' we go way back; here is some info for you. First, they cannot take your house for the lien. Next the lien would be settled first after a sale but if it gets you only partially out from under, what have you gained? You still need a place to live. Did you reaffirm your mortgage? If you did not, you could walk away from the house. The lien is on the house and the bank will own the lien. (it would be dropped more likely)

IRS will work with you. How much do you owe? I owe 27K non dischargable. I was paying 550 a month on a payment plan. The oldest year goes first, then works towards the current year. I could not afford that much and asked to lower it to 400. IRS was very nice and yes they lowered it. If you work with them, they will work with you. I would not trust one of those pay for agencies that brag they can get you off for pennies.

You are in your new start. Part of that is a "state of mind". Please choose happiness everyday as your choice of the day. There are worse situations right here as you read. 'Hub

[Iwantmyname]

No "Iwantmyname" she has already had her bk7 and is discharged.

man, I must have been asleap when I typed that. I apologise.

[StartingOver08]

OP, check into the actual value of your home. If the sale of your home will clear most of the IRS debt, (or all if you can negotiate it) then why not sell your home and get your new start.

It is one thing to make payments on a small amount owed to Uncle Sam (<$10k or so). It is something else entirely to have a lien that continues to accrue interest. BTW, even if the bank forecloses on the house, it does not get rid of the IRS lien! That lien just stays with YOU.

Why don't you work out an arrangement with Uncle Sam that they will accept the proceeds from the sale of your home in settlement of the IRS debt - you don't have anything else, right? You already have your Ch 7 and discharge. I am thinking along the lines of an OIC. If the house equity can clear all of your debt (or even most of it) with the IRS, then sell the house. There are always houses to buy - later, when you are back on your feet with a solid foundation.

[southernbelle]

I guess I'm thinking more along the lines of what "Starting Over" is suggesting because if I can get them to temporarily remove the lien so that I can sell it and pay most of the debt and end up owing only a small amount of total debt as opposed to making payments for 10+ years that would be ideal. Keep in mind that I have a couple of other liens from other taxing authorities and if I attempt payment plans with each of them, I'll be back in the same situation I was in before chapter 7 where I was robbing Peter to pay Paul living hand to mouth. The way it works is everyone wants to be paid first and don't seem to have any problems with liens and levy's if you don't pay up. I'm checking into the total amount of liens on the house to see if maybe I can get an appraisal to see what the numbers are.

I've been doing some reading and it seems as if the IRS lien attaches itself to any/everything I own and not just the house. The house is the only thing of value that I own to my name and if it gets me "almost" to the finish line I'll take that any day over the constant threat of the IRS looming overhead.

Hub, we go waaay back and I completely understand where you are coming from. I always cherish your advice because you are going through what I'll be going through soon. You and your wife have been awesome with helping me and I hope you keep giving me advice because I need it. My only concern with a payment plan is the fact that I owe trust fund taxes which I don't expect them to be very friendly in their dealings with me even though I feel like the victim in all of this. Considering your payment plan of $550 on a $27k debt scares me when I look at the fact that I owe about $80k to the IRS, and I also owe the State, and Parish for taxes not paid by my ex and the total is constantly growing. I know they look at disposable income but from what I hear they are worse with expenses than BK. I feel like I'm at their mercy and if selling this house gets me closer to the finish line, then I'd happily give them 100% of the proceeds with a big grin.

I am very thankful that I am not in a worse situation because I know for a fact that things could be worse but I dread the constant threat of what will come if I don't decide how to handle this quickly. I've been here for quite a while and this is still my constant source of support and help when I need it and for that I thank all of you.