Dealing with Property Taxes through Bankruptcy

Property taxes Bankruptcy can help with your property taxes by 1) writing off your other debts 2) giving you more time to pay while protecting your home.

Since Texas has no state income tax, homeowners here pay relatively high property taxes. It is the largest source of funding for all your local governmental services.

If you fall behind on property taxes, you will be charged penalties of up to 12% PLUS interest at 1% per month. You could also be sued for collection—adding another chunk of penalties and costs, or your property could be sold at auction to pay the taxes.

Discharging Other Debts to Be Able to Pay Property Taxes

This blog assumes you want to keep your home, and that you’ve fallen behind on your property taxes. If that’s happened, then most likely your income has not been enough to meet your expenses, including payments on your debts. Sometimes just relieving yourself of the other debts will do enough to allow you to catch up on your property taxes. Some taxing entities will let you catch up with payments over 36 months. So you should find out if that would be available to you and if you could afford this. If so, a Chapter 7 “straight bankruptcy” may provide what you need.

Gaining More Leverage over Property Taxes through Chapter 13

But you may not have a workable installment payment plan available to you for a number of reasons:

  • Unable to afford the monthly payments required
  • Payment plan not offered by your tax collector
  • The collection process has gone too far to be eligible for a payment plan
  • Already tried a payment plan but could not pay it on time
  • Your mortgage lender insisting that you bring the taxes current much more quickly

Under the Chapter 13 “adjustment of debts” version of bankruptcy, you can stretch your catch-up property tax payments out over as much as the next 5 years, thereby reducing each month’s installment and making it more affordable. And during that time the taxing authorities would not be able to take any other collection activity—saving you both worry and those extra costs—as long as you fulfilled the terms of the court-approved Chapter 13 plan.

Chapter 13 may also enable you to pay your back property taxes relatively quickly, to minimize the accruing interest and penalties, by delaying payment to other important but somewhat less powerful creditors, such as the IRS or a spousal support enforcement agency.

One last thing. If you are behind on property taxes, that often means that you are also behind on your mortgage. Chapter 13 can be the best way to address that related problem, because in the same way it can stretch out your mortgage catch-up payments for up to 5 years, while protecting you from foreclosure and other collection efforts of your mortgage holder .

Let me show you how Chapter 7 and Chapter 13 bankruptcy can help you solve your financial problems, with your vehicle loan(s) and with everything else. If you are in the Rockwall, Heath, Greenville, Lavon, Wylie, Mesquite, Royse City, Sachse or Rowlett, Texas, contact the Law Office of Carrie Weir. The initial consultation is free. Please call 972-772-3083 or use this form .

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Call Rockwall bankruptcy lawyer Carrie Weir at 972-772-3083 or fill out the contact from below for a free, confidential consultation to discuss your options.

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