How Can Bankruptcy Address Delinquent Property Taxes?

 Posted on January 13, 2022 in Bankruptcy

If your family has experienced financial difficulties, such as the loss of a job, large medical expenses, or a disability, you may be struggling to pay certain types of debts. If you are a homeowner, you may have gotten behind on your mortgage payments as well as other expenses, including property taxes. Unfortunately, nonpayment of property taxes can lead to a number of issues that may affect ownership of your home, including property tax liens or different types of foreclosure. While bankruptcy may be an option for addressing property taxes and other debts, it is important to understand your options and the best steps you can take to ensure that you can maintain financial stability in the future.

Addressing Property Taxes Through Chapter 7 or Chapter 13 Bankruptcy

If you have not paid property taxes for multiple years, your local or county government may pursue a property tax foreclosure. However, in many cases, you are more likely to face a foreclosure by your mortgage lender. Since payment of property taxes is a requirement in a mortgage loan, failure to do so may be considered a violation of the loan agreement. If a mortgage lender has paid property taxes to avoid a property tax foreclosure, they may choose to foreclose on the property to seek repayment for this amount.

Whether you are facing a property tax foreclosure or a foreclosure from your mortgage lender, you can put a halt to these proceedings by filing for bankruptcy. Doing so will create an automatic stay preventing creditors from attempting to collect debts or repossess property. You will then be able to determine your options for addressing your property taxes and other debts.

In some cases, Chapter 7 bankruptcy may be an option to help you become current on your property taxes. While this type of bankruptcy generally cannot eliminate property taxes that you owe, it may be used to discharge other types of debts. This could potentially free up income that will allow you to pay the amount of taxes owed, become current on your mortgage, and continue making ongoing payments. However, Chapter 7 may not provide enough relief or allow for enough time to make up missed payments.

Chapter 13 bankruptcy is often the preferable option for dealing with property taxes and other home-related debts. This type of bankruptcy will allow you to group your property taxes, delinquent mortgage payments, and other debts into a repayment plan. By making regular payments toward this plan for either three or five years, you can pay off the amount owed. Once the plan is completed, certain types of unsecured debts, such as credit card balances or medical bills, will be discharged, putting you in a good position that will allow you to make ongoing mortgage and property tax payments in the future.

Contact Our New Braunfels Bankruptcy and Property Taxes Attorney

If you have been unable to pay property taxes and are facing foreclosure or other issues that may affect your ownership of your home, you will want to understand your options. The Law Offices of Chance M. McGhee can advise you on whether filing for bankruptcy may be beneficial, and we will work to ensure that you can receive the debt relief you need. Contact our Boerne bankruptcy lawyer today at 210-342-3400 for a free consultation.

Sources:

https://www.law.cornell.edu/uscode/text/11/362#a_4

https://ilga.gov/legislation/ilcs/documents/003502000K21-75.htm

https://homeguides.sfgate.com/am-responsible-property-taxes-after-bankruptcy-47941.html