By Ryan C. Wood
Not to get too political, but do we Americans ever really own property in the United States? The structure of ownership is more like a lease from the government that can be increased. I consider my property tax to be a yearly lease payment. I will never really own the house or the dirt under it if it is located in the United States. Anyway, that is another story for another time.
How to Pay Back Unpaid Property Taxes
If you are behind on your property tax payments or have unpaid property taxes in Alameda County or San Mateo County we can help. Yes, your house can be foreclosed on and sold at auction if you do not pay your property taxes. So how can filing for bankruptcy protection help? First of all it will stop any tax sale from taking place. But filing a Chapter 7 Bankruptcy case will not help for too long. Filing a Chapter 7 case will not pay back the missed property tax payments and the taxing authority can ask the court for permission to continue with the foreclosure process.
To repay the property taxes you need to reorganize your debts by filing a chapter 13 bankruptcy that will allow you to spread out the missed payments over 36 or 60 months depending upon your circumstances. For example, if you owe $20,000 in unpaid property taxes they can be paid back at approximately $556 per month (plus interest, the trustee and attorney fees) or approximately $334 per month (plus interest, the trustee and attorney fees). These estimated Chapter 13 plan payments are assuming you do not have any other debts that must be paid back through the plan or have an obligation to pay unsecured creditors if any. This is just looking at if you owed property taxes. Under California law the interest rate should be 18% per annum. If you do not include 18% interest most counties will object to confirmation or approval of the Chapter 13 Plan. Interest is not included in the above estimated payments either. Most Chapter 13 Trustees’ fees average from 5% – 10% of the monthly plan payment. If the Chapter 13 Plan payment is $200 a month, then about $17.00 of the payment goes to pay the Chapter 13 Trustees’ fee. Most Chapter 13 Plans have part of the attorneys’ fees included in the plan so that you do not have to come up with all of the attorneys’ fee prior to the case being filed. In the Bankruptcy Court for the Northern District of California most divisions have a Rights and Responsibilities for that provides the attorneys’ fees that can be charged without having to file a full fee application for approval of the fees by the Bankruptcy Court. If there are $3,000 in attorneys’ fees as part of the plan, approximately $50 of the Chapter 13 Plan payment will go to your bankruptcy attorneys.
Property Tax Foreclosure Sales Do Happen
Not making your property tax payments is no joke. Just ask this poor soul who failed to pay a small amount of interest on her property tax payment. For $6.30 a tax sale was conducted and her home was sold. She was going through some difficult times, but she also did not open her mail and missed a number of notices. See Widow Who Lost Her Home.