Lien options

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    Joe Orabona

    Just spoke with someone with a lien issue. From a previously filed joint return with her ex she/they owe about 53,000 (initially about 100K). Per the divorce he agreed to pay the full amount and it’s in an IA. She wants to sell the current home and buy a new one. Unfortunately the tax debt will eat up almost all of their equity which she needs for the down payment on the new place.

    I’m only seeing 2 options here for her, neither of which are great.
    1, get an equity loan to pay down the debt to under 25,000 and get the lien removed
    2. get an equity loan to use for the down payment.

    In both cases I’d have to get the IRS to subordinate their claim which I think would be a lot easier for option 1 than 2. She’d also have to get a lawyer involved to make sure that he pays her back for this.

    Does anyone have any better ideas or want to tell me that my plan has no chance of success?

    Eric Green

    I am assuming the equity in the house is all hers. If so I agree with you – the IRS will never agree to #2. You stand a chance with #1. If its half hers then getting a home equity line and paying it below $25,000 would work out because they could then get her the half that belongs to her.

    Lisel Sutter

    I have a client that has a Tax lien on his home for tax years 2010-2013, with the majority being owed from 2010. The debt started at about $40k, but with penalties it is now at about $70K. I am still needing to research the applicable statute dates for 2010, however, it is my belief that as we near the statute lien release date that the IRS will become more aggressive, possibly forcing the sale of the home if the lien amount is not paid. What are the chances of that happening vs. the IRS missing it and releasing the lien? We are trying to plan ahead. A few of the thoughts I have with respect to this case would be exploring: 1) Lien release options and getting taxpayer on a payment plan to ride out the statue (not sure how to do this with a $70k debt so reading Eric’s book). 2) BK – there is a lot of equity in the home, so not having a BK attorney at my disposable at the moment, thinking it will be a repayment BK if this option is exercised. 3) Client cannot refi home because he is 65 and ill, not expected to recover and his wife only makes about $35k per year. 4) Doing OIC but not sure if that works with liens and one who has so much home equity. Client can likely pull $30-$35k out of retirement funds to settle this if that made sense. I know OIC’s are done for much less, but this is little different I think due to lien on real estate issue. Any advice would be most appreciated. Thank you!

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