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by Jesse Campbell on February 19, 2014

Does bankruptcy remove unpaid property taxes

 

Ask the Experts: Bankruptcy and property taxes

I owe several years back taxes on my home. If I file bankruptcy will it help with these taxes? –Bernadette

Hi Bernadette,

I’m sorry you’re in a position to be considering bankruptcy. That’s never a good situation to be in.

Bankruptcy is a long, complicated process. It’s there to help you hit the reset button, and while it can remove a majority of your debts, it doesn’t absolve you of all of your debt obligations.

To answer your question about property taxes, first you have to determine what type of bankruptcy you’ll be filing. The two major types of consumer bankruptcy are Chapter 7 and Chapter 13.

Chapter 7 is the type we generally think of when we talk about filing bankruptcy. Your nonexempt property (anything that isn’t considered essential) is sold to pay creditors and your remaining unsecured debt is dissolved. Chapter 13 is basically a court-mandated structured repayment plan – you keep your property and use available disposable income to make payments towards your debts.

In Chapter 13 your back property taxes would be repaid like your other debt obligations over the course of your mandated repayment program. In Chapter 7, property taxes less than a year old cannot be discharged, however, property taxes that were assessed more than one year prior to filing may be included. Tax liens, on the other hand, can never be discharged through bankruptcy. So if your unpaid property taxes have been converted into a tax lien that will stay in place no matter what, until you sell your house and use the proceeds to pay the liens.

Your best bet when it comes to bankruptcy is always to speak with a qualified attorney. Check out Bankruptcy.org for more information on bankruptcy, as well as our Attorney Locator to help you find a qualified attorney in your area. Best of luck.

Tags:  taxes, bankruptcy
Posted in:  Bankruptcy, Taxes

Comment(s)

connie says:
November 09, 2016

I owe back property taxes and have been give a lien notice for $20,000 due by May 2017...will filing chapter 13 stop this now? just got this notice and want to file but need to know if I am still able to do so.



deb chitester says:
September 07, 2016
Website: slllc.org

repaid like your other debt obligations over the course of your mandated repayment program. In Chapter 7, property taxes less than a year old cannot be discharged, however, property taxes that were assessed more than one year prior to filing may be included. Tax liens, on the other hand, can never be discharged through bankruptcy. So if your unpaid property taxes have been converted into a tax lien that will stay in place no matter what, until you sell your house and use the proceeds to pay the liens. Your best bet when it comes to bankruptcy is always to s i received bills from prior years due to loss of exemptions in chapter 13 what counts when i get the bill or the tax year for which i am now being billed?



John B Scott j says:
October 08, 2015

What is a Chapter 11? Are there other bankruptcies that are less known?



Judith Vogel says:
August 15, 2016

I hold three years of tax liens on a property that is owned by people who recently filed for bankruptcy. Can I still file for a Treasurer's Deed on this property?



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