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Preventing a tax lien sale by filing bankruptcy

Most people know how important it is to pay their mortgage on time. They know that if they don't make timely payments or fail to pay for a significant amount of time, they could face pushback from their lender who may push for a foreclosure in certain circumstances.

Just as it's important to pay on a mortgage, it's also imperative that home owners make timely payments on their property taxes as well. Just as a bank can take legal action against a home owner and seize their property, so too can the government in the form of a tax lien.

Unfortunately, knowing what needs to be done and following through on this can be incredibly challenging - if not impossible - if you're a home owner who has fallen on hard times. Maybe you've lost your job or are struggling under immense medical debt. Whatever the reason, you may be unable to pay your property taxes even though you want to. In such cases, it may be best to turn to a bankruptcy attorney to discuss your options for relief.

How can bankruptcy help home owners?

Just because you're behind on your property taxes does not automatically mean a tax lien is against your home. Your local government must first file a notice and secure a lien before additional steps can be taken, such as the sale of your home.

Because bankruptcy triggers an automatic stay against creditors, it's not possible for the government to secure a tax lien against your home after you have filed. This gives you the chance to sell property in order to pay off your debt, hopefully allowing you to keep your home in the process.

Because Chapter 7 liquidates all assets to pay off debts, this may not be the best type of bankruptcy for home owners who want to keep their house safe from a tax lien. However, this may be the better option to avoid such an outcome in the end. This is generally considered to be one of the more troubling aspects of bankruptcy and is also the reason why so many turn to an experienced lawyer to learn about their options. 

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