Update: tax liens, BofA charge-off

[Suffering from a Tax Lien]

I had a total of five tax liens, two Federal and three state.

Well, I disputed some of the paid-off liens, without giving a reason, and three of them are GONE. They were correct, and not withdrawn, but because they were paid, I guess the relevant bureaucrats didn't bother to verify them. However one of the IRS liens, which was also paid, did get verified. I guess there's a bit of a dispute lottery. The conclusion I come to is, if you have paid-off tax liens, you do have about a 40% chance of getting them deleted by disputing them.

Note that there is now a program within the IRS (as of this February) to withdraw paid-off liens using a Form 12277. I highly recommend doing this. It means the lien will be truly withdrawn and then it must be deleted. My state (California) does not yet have that program, so it was just by luck that I got three state tax liens deleted from my report.

I noticed there were some real errors in how liens were reported, too. One of them was reported twice, once with the digits shifted over. Some liens showed up on some of my reports but not others. EX had the most of them reported. Lien releases didn't show up very reliably.

It seems like lien reporting, lien release reporting, and lien verification, are all quite sloppy and inaccurate. That can work against you (it could be over-reported or releases will fail to be reported) and it can work for you (you can get them to delete liens just because they can't find them.)

It also seems like I didn't get a big credit bounce from having deleted a paid-off lien. My Equifax FACO score went up about two points. Still, liens look really bad to lenders so it's better to have it DELETED. I'm still waiting for the IRS to finish processing my Form 12277 and then I will only have one lien (the state lien) left. And apparently California is planning to pass legislation to allow withdrawal of paid-off liens, so hopefully by the end of this year, all my liens will be GONE from the credit report.

On to other news... five years ago I defaulted on a BofA Visa card and it went to collection. I did settle with the CA just recently, and they were cool and stopped reporting. I noticed one other CA also voluntarily stopped reporting or didn't verify a settled collection. I guess from their point of view, there's no reason to waste time and risk any liability (however slight) from reporting settled collections.

BofA unfortunately does keep reporting, and I disputed it, and even though it's five years old they verified it. Oh well. I might try pay for delete with them to see what happens.

Basically within the past month my credit has gone from a disaster, to having only a few old outstanding negatives, and those will be going away soon too.

The most important point of this long rambling post is that tax lien reporting is sloppy at every stage, and you can benefit from that, and you can get IRS liens withdrawn if they are paid.

This is all a big deal for me, not just for borrowing money, but also for passing a government background check next year. Now my credit looks acceptable enough for them to pass it.

[Suffering from a Tax Lien]

Update again: just checked all three agencies, and three out of five of my liens (all are paid) are DELETED, even though, according to the rules, they should still be reported.

Also, likewise, my two collections are DELETED, even though they could still be reported.

Of my two remaining reported liens, one of them is Federal and should (I expect) be withdrawn by a Form 12277 request. So I'll be left with one state lien, which will drop off the report next year. My BofA charge-off will also drop off the report next year, and I did send them a PFD offer.

I will have gone from a disastrous credit report to a reasonably good credit report in a very short time, just by being aggressive with it and disputing lots of things! At that point I will probably apply for another CC with a higher balance to start getting some more positive credit history.

[road ragin']

Was your submission of form 12777 successful in withdrawing the lien from your reports and, if so, how long did it take from the time you sent the form?

Thanks in advance!

[Suffering from a Tax Lien]

Originally Posted by road ragin'

Was your submission of form 12777 successful in withdrawing the lien from your reports and, if so, how long did it take from the time you sent the form?

It's weird, one of them worked and the other didn't. I got no response from one of them. I'll try again.

Also one of the credit agencies didn't record the fact that the tax lien was withdrawn. My conclusion is I would need to sue the credit agency.

[road ragin']

Thanks for your quick response. I have one lien (for several years) that I've paid off and just received the lien release. Sending the form 12277 tomorrow and am hoping for a favorable outcome.

What kind of time frame am I looking at for the withdrawal to take place?

[Suffering from a Tax Lien]

Originally Posted by road ragin'

Thanks for your quick response. I have one lien (for several years) that I've paid off and just received the lien release. Sending the form 12277 tomorrow and am hoping for a favorable outcome.

Good luck! I hope they will do it quickly.

Originally Posted by road ragin'

What kind of time frame am I looking at for the withdrawal to take place?

I think it was a few weeks? It didn't have any noticeable impact on my credit score but it does look better when potential lenders are looking at the file.