What Happens To Liens If House Is Foreclosed?
My brothers house has about $46,000 in equity in his house.
He has a $25,000 (and growing daily!) IRS tax lien on the property.
Now he just found out his ex wife put a $20,000 lien on the house for back child support (penalties and intrest mostly)
What happens to these liens if the house is foreclosed??
Thanks,
Emily
"If I were him I would try to work out an agreement with his ex for her to remove the lien."
We know that isn't gonna happen.
He needs to contact one of the many groups out there that will negotiate with the IRS on his behalf and get the IRS lien removed first. They can settle for usually much less than what is owed to the IRS.
Once that is settled he can work on getting a HELOC to pay off the Ex for child support.
The foreclosure would ruin his credit, which looks to be in pretty bad shape already. If the house only sold for what was owed on the 1st mortgage the Federal Tax lien would still be out there and attached to other assets like bank accounts, cars, ect.
More than likely the Ex has obtained a judgment for child support and if she has attached the house is also looking for additional assets to attach like bank accounts, garnishing wages, ect.
If the brother decides to stop paying his mortgage to go into foreclosure he runs the risk of the house being sold at a low price at the auction, wiping out all of his equity, and still having these two outstanding debts.
He needs to figure out a way to get these paid.