Tax Liens and Chapter 7 Bankruptcy

By Nehemiah Jefferson, Esq., LL.M.

While a debtor may not be held personally liable for a discharged debt, a lien that was not made unenforceable in the bankruptcy proceeding will remain even after the bankruptcy.  This means the secured creditor could enforce the lien to recover property even though the debtor is no longer personally liable.

Stated another way, if a tax lien is filed or in place prior to a debtor’s bankruptcy filing, that tax lien takes priority over the bankruptcy filing.  In summary, a discharge in bankruptcy would not extinguish a secured tax lien on property.

Lastly, it should be noted that exempt property (e.g. a Florida homestead exemption), would not be protected from the prior tax lien filing as well.

Nehemiah Jefferson, Esq., LL.M., is Principal of Esquire Tax Firm PLLC. The firm practice areas include Civil and Criminal Tax Representation, Estate Planning, Probate, and Business Planning. He earned his Bachelor’s degree from The Florida State University, his Juris Doctor from John Marshall Law School (Atlanta), and LL.M. in Taxation from the University of Alabama. Attorney Jefferson is licensed to practice law in the State of Florida, Texas, The District of Columbia, and is a member of the United States Tax Court Bar. He may be reached at www.esqtaxfirm.com.