By Ryan C. Wood, Attorney at Law

As we begin 2011 the mortgage crisis has yet to come to an end.  Many homeowners are struggling to pay their mortgage and are forced to make very difficult decisions about who gets paid each month.  So what about property taxes in this mess?  What happens if property taxes are not paid?

Property taxes are secured by the property you own, just like the mortgage you agreed to when you purchased your home.  Unlike a credit card debt, personal loan or medical debt, property taxes and mortgages are not debts that you are personally liable for; they are only secured by the property itself.  If your house is foreclosed or short-sold you will not owe the unpaid property taxes to the county.

The next issue is whether you are trying to keep the house or not?  If yes, then you will have to pay the property taxes at some point.  If your property taxes have not been paid for a year or more, and you cannot make the lump sum payment, there is help.  The first thing you should do is contact your county to see what options are available for you to enter into a repayment plan.  Another option is to file Chapter 13 Bankruptcy to make paying back the property taxes affordable by spreading out the unpaid property taxes over three to five years.  See our Chapter 13 Time Line for more information about filing a Chapter 13 Bankruptcy.

What about taking a cash advance on a credit card or borrowing from a retirement account to pay property taxes?  Do not do it.  You can go for years without paying property taxes before your county initiates a tax sale.  As mentioned above, property taxes are secured by the property.  If the property is gone, so is your obligation to pay the property taxes and the property taxes that are past due.  So why take on debt from a source that will be with you after the property is gone.  Long after your property has been foreclosed on or short-sold you will still be making payments to the credit card or retirement account you borrowed the money from to pay your property taxes.  So if you are having trouble paying your bills each month, your property taxes should not be at the top of your list.  You should also not borrow funds to pay your property taxes.

For more information about property taxes and bankruptcy you may contact us toll free at 1-877-9NEW-LIFE.  We have offices located in Oakland, San Francisco, San Jose and Redwood City proudly serving those in need of debt relief.