Glendora, CA asked in Bankruptcy and Tax Law for California

Q: Can I do a Bankruptcy for Property Taxes if paying it will cause Financial Burden to family and get a fresh start?

Five years behind waited because I didnt know what to do and pay for it but I understand to pay now but its like cant get a loan due to bad credit not working due to Covid.

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5 Lawyer Answers
Michael Jay Berger
Michael Jay Berger
PREMIUM
Answered
  • Bankruptcy Lawyer
  • Los Angeles, CA
  • Licensed in California

A: Careful! When you are 5 years behind on your property taxes, your real property can be sold at a tax sale. You don't want to lose your property. Any bankruptcy filing will temporarily stop a tax sale of your property, but the property taxes will NOT be wiped out in bankruptcy. They will remain a debt secured by the real property and will continue to accrue interest. A Chapter 11 or Chapter 13 bankruptcy filing will allow you to pay back the delinquent property taxes over time. If you are anywhere in the Southern California area, please call me for a free consultation. 310-271-6223.

Peter Maurice Lively
Peter Maurice Lively
Answered
  • Bankruptcy Lawyer
  • Culver City, CA
  • Licensed in California

A: You can repay real property taxes through a 5 year chapter 13 plan.

You can allow the tax collector to auction the real property to pay the property taxes, so that you don't owe the property taxes individually.

You can NOT keep title to the real property and discharge the real property taxes in chapter 7 because they are a statutory first position lien on the real property and the tax collector has the right to auction the real property for non-payment.

Aaron Michael Lloyd
Aaron Michael Lloyd
PREMIUM
Answered
  • Bankruptcy Lawyer
  • San Bernardino, CA
  • Licensed in California

A: Do you still own the property that the property taxes go to? If you no longer own the home then you can file bankruptcy on the property taxes but on the other hand if you own the home then the property tax is still owed.

If you still own the home then property tax is treated as having a secured debt in bankruptcy and you would still want to pay them off after a chapter 7 bankruptcy or pay them off as required during a chapter 13 bankruptcy.

To determine which bankruptcy is best for you, I suggest scheduling a consultation with a bankruptcy lawyer so you know your options.

I hope this is helpful.

Harlene Miller
Harlene Miller
Answered
  • Bankruptcy Lawyer
  • Irvine, CA
  • Licensed in California

A: From your question, it sounds like you are looking to file a chapter 7 bankruptcy to get a fresh start. Unfortunately, property taxes are secured on the property that you own. Even if you were to file chapter 7, the lien from the taxes would remain on the property. To retain the property, you need to pay the taxes. As my colleagues have mentioned, chapter 13 may be an option if you have disposable income available - which allows you to pay money to creditors over a maximum five year period. I urge you to talk directly with an experienced bankruptcy attorney in your area who can analysis your financial situation including value of the property and your income and expenses, and assist in guiding you to a solution.

Theodore Allan Greene
Theodore Allan Greene
Answered
  • Bankruptcy Lawyer
  • Sacramento, CA
  • Licensed in California

A: Property taxes go with the home. If you want to keep the home and can afford it you can pay the taxes through a Chp 13. If you can't afford the payments and have equity you should consider selling the house rather than a foreclosure or tax sale. I have helped many people in similar situations.

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