If you owe property taxes on your home and there may be a foreclosure sale, can you avoid tax foreclosure by filing bankruptcy? Can you get the property taxes fully or partially discharged in bankruptcy?
If you owe property taxes on your home and there may be a foreclosure sale, can you avoid tax foreclosure by filing bankruptcy? Can you get the property taxes fully or partially discharged in bankruptcy?
The issue in filing bankruptcy is that the property tax debt results in a lien against your home. Thus, even to the extent that a property tax debt might be given lower priority than other secured debts, the property will remain subject to the lien and thus subject to possible foreclosure.
A person in this situation should discuss their options with their bankruptcy lawyer. For example, the person might benefit from filing Chapter 13 bankruptcy. As long as the homeowner is making payments on a Chapter 13 repayment plan, the homeowner will be protected from foreclosure -- and the same applies to house payments. In other words, even when the lien cannot be discharged, a Chapter 13 bankruptcy can be a good option for a debtor who needs time to catch up on house and property tax payments while avoiding foreclosure. Chapter 13 plans are often five year plans, so that can provide considerable breathing room for a person who might otherwise lose a home.