If you have a tax lien on your credit report, you should take immediate action to remove it. This is a very bad mark and will lower your score considerably.
The first step is to have the lien validated; you must do this directly with the bureau. Simply send them a dispute letter and ask them to validate the debt.
Unfortunately mistakes do happen on your report; there are estimates that 1 in 4 people have an error on their report.
When your letter is received then the bureau will contact the state or federal government and ask them to verify the debt. If it is verified then you will have to negotiate payment to remove it.
If you have a large debt you should speak with a tax attorney or negotiator to help work out some form of repayment. Frequently you can pay a reduced amount, and when paid you can remove it from your report.
A tax lien can be collected upon for 10 years, and will stay on your report for 7 years once it is paid. If not paid then you can be reporting a tax lien on your report for a considerable amount of time.
However once you pay in full, wait three months and dispute the mark again. It has been learned that frequently the government will ignore future validation requests from the bureaus once a lien is paid.
Thus your lien will not be verified and the bureaus will remove it from your report. Additionally if this mark was make in error then send any documentation along with your dispute letter to prove that.
The IRS and state government often accept partial payment. To propose this to them you will make an offer in compromise, often called an OIC.
When the government decides to accept your OIC or not they will look at your; ability to repay, your assets, and your income. It can help your cause if you send a letter pleading financial hardship.
It can help to have a tax negotiator though it is not essential.
In sum, you can remove a tax lien and other negative marks from your credit report. You do not just have to live with bad credit.
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