If you have a questionable or unverifiable lien on your credit report, you may be asking yourself: How can I remove a lien from my credit report?

How you go about doing this depends on what type of lien is listed on your credit report.   If it is a General Lien, such as a car loan, the lien is removed when the loan is paid off in full.  Unless you dispute your credit report first, it is up to the bank or other lender to determine when it is removed.  If after a reasonable amount of time the lien still has not been deleted, you will have to write a letter to the credit bureau.  Its good to have a copy of the last payment made or other information confirming the debt has been paid, such as a payoff letter or canceled check.

A lien from the IRS stays on your credit report until you pay off the taxes owed, which why the lien was placed in the first place.  If you can prove a financial hardship or have paid enough to satisfy the principal amount, the IRS may decide to forgive the balance.  There are other options, but there is no magic bullet.  Accurate liens are simply not removable until the debt has been paid off.

However, many times a lien is just not accurate or verifiable. Banks and credit bureaus make mistakes and often report inaccurate information. There are methods to legally and ethically dispute bad credit, even if you are aware of the underlying debt.

If you decide NOT to exercise your right to dispute a lien, the first option is to ignore the lien and do nothing.  If you decide to wait it out until the statute of limitations expires (which is usually about 10 years) the lien will remain on your credit report and prohibit you from being approved for any credit.

Another way is to pay off the amount owed.  The lien will be released immediately.   You could set up a payment plan, but this will not remove the lien until the balance is paid in full, plus you will be accruing penalties and interest the longer it takes to pay.

You can also file for an “Offer in Compromise.”  A tax lien will be released if you can settle your back taxes owed for a fraction of the total amount owed.  You will have to prove that the amount you are offering will be equal to or more they are likely to collect from you if they had to go to a collection agency to retrieve the funds owed.

If you feel the lien has been filed in error, you have the right to file a Notice of a Right To Request a Hearing” which appoints a judge to look at your case.  The hearing has to take place within 30 days from the sixth day after the the lien filing.  This means you actually have 36 days.  If you win the appeal, the lien will be removed, although the filing of the lien will still show up on your credit report.

Tags: removing a lien

This entry was posted on Wednesday, March 24th, 2010 at 10:35 am and is filed under Liens, credit strategies. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.