authority to seize the property to satisfy the debt. At this stage, you could also lose wages, vehicles, and other personal property as a means of satisfying your debt. In some instances, the IRS will let other creditors take their debts before the IRS as they may also make a compromise that allows the taxpayer to pay o ff t he debt in small instalments. SELLING A HOME WITH A LIEN For some people, using the equity in their houses to pay outstanding debts or loans, including their property taxes, is the only option available. Th ere are a few ways to use home equity to pay debts. One choice is to remortgage the home. Another is to sell the property altogether. Remortgaging (or re fin ancing) property has the advantage of drawing down equity such that one has additional capital to service debt. It’s trading an asset (ownership in your house) to eliminate a liability (personal loan, credit card debt, and current amount of delinquent taxes). Th e proceeds obtain through re fin ancing the mortgage can be used to pay o ff debt. In this manner, a homeowner who has several smaller debts, such as multiple credit card debt at interest rates approaching 20%, may consolidate all debts into one lower monthly payment on a loan with sign ifi cantly smaller interest. Th is is more manageable on a cash fl ow basis than a situation in which one has many unpaid, disparate loans. Th e homeowner should approach several diff erent lenders to shop for the best deal. Th e second option is selling the home, which also has advantages. An intangible, yet important, bene fi t of the sale of a home to cover debts is the fin ancial freedom that comes once the transaction is complete and the seller is debt-free. Of course, the seller will have to be able to make rental or other living arrangements. If this is 110
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