Can Unpaid Property Taxes Be Discharged In Bankruptcy?

Bankruptcy law does not allow for the relief of property taxes assessed and payable within one year of filing for bankruptcy. Your personal liability for older property bills may be relieved. However if there is a tax lien on the property because of the delinquency the property taxes will not be discharged in bankruptcy.

The focus of this article is on a Chapter 7 bankruptcy proceeding because it is the direct path to eradicating debt. If you file for Chapter 13, you will be rescheduling your debts into a structured repayment plan. The repayment program over either 3 or 5 years will likely include your property tax debt.

If you own your property outright and want to keep it, you may want to file for Chapter 13 to gain more time to pay the taxes.

Chapter 7 Bankruptcy | Your Mortgage Escrow & Property Taxes

In Massachusetts, municipalities are granted automatic liens as a security instrument for collection. So long as you are current on your taxes, a lien on your property will not happen.

If you fall behind, the city can invoke its right to place a lien on the property. This right begins automatically on January 1st of the assessment year and is given under Massachusetts General Laws [M.G.L. c.60 §37].

You can get the lien removed at any time before a sale or auction is announced by paying the total taxes owed in full, plus any interest or penalties.

If you cannot do so, we encourage you to speak with a qualified bankruptcy attorney – the sooner, the better.

What You Can Do Now

Your best course of action depends on many variables, and there is no way to know which strategy and available options will be right for you. The best course of action is to schedule a free consultation with Attorney Oberhauser who can review yoru case and tell you the best way to proceed,

If you are also behind on your mortgage speaking to Attorney Oberhauser is essential as he has experience helping others to stop foreclosure on their homes.

It’s possible that your property tax debt could trigger a tax foreclosure. It can be a difficult, uphill battle to save your home once a city decides to sell its interest in your property in settlement of your account.

 

Key considerations to keep in mind:

  • If your back taxes trigger a lien, you will need to work with an attorney to ensure the lien is properly cleared once you make all remittances.
  • Should you decide to give up your property; a tax lien will not just disappear. In fact, if the lien is perfected through the courts, it will be reported to the credit bureaus.
  • A lien will adversely affect your credit. If you are going into bankruptcy with the intention of getting out of your home, it’s best to coordinate the bankruptcy filing with the issuance of the tax lien as closely as possible to minimize credit restoration wait-time.
  • A property tax lien is released only by the tax authority that issued it. Liens move with the property, not the person.
  • If you have received a notice and complaint from the tax authority regarding your lien for back taxes, do not ignore it!
  • The Notice and Complaint is a lawsuit. If you do not answer the complaint, the town can get the land court to rule in its favor and that could lead to a tax foreclosure.
  • If the lien winds up on your credit report, you’ll need to request its removal from the credit bureaus.
  • You can either show a release of lien (if the taxes got paid) or wait until the statute runs.

Consult with Gregory Oberhauser an Experienced Bankruptcy Lawyer

Chapter 7 bankruptcy is a viable solution for many homeowners facing insurmountable debt, even when that debt includes property taxes.

A qualified, experienced bankruptcy lawyer can handle the complexities of your filing so you can begin to enjoy the benefits of starting over.

If you owe property taxes, or are behind on your mortgage escrow payments, you should consult with Attorney Oberhauser to help determine the best course of action as soon as possible.

Call us to schedule a free consultation. 978-452-1116

Attorney Gregory Oberhauser

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Gregory Oberhauser is the ONLY attorney in Massachusetts to be distinguished as an ACS-CHAL Forensic Lawyer-Scientist by the American Chemical Society!

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