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How To Stop Property Tax Foreclosure

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How To Stop A Property Tax Foreclosure

If you are facing the ticking clock of property tax foreclosure, you may feel desperate to pay those debts off as quickly as possible so you wont lose your home. That may seem like the right choice even if your other debts are bigger or more expensive. You may have heard that a bankruptcy wont help you save your house, or that you may even be forced to sell as part of the process. But that isnt always the case.

Its true that if you have more than the allowed amount of net equity in your home, a Chapter 7 bankruptcy trustee will sell that property to free up money to pay off your other debts. But the same is not true in a Chapter 13 bankruptcy. Instead, if you have the regular income to qualify, you and your bankruptcy attorney will put together a plan to allocate your income over the next three to five years and repay part or all of the debts that existed on the day the petition was filed.

So how does that help with foreclosure? Every bankruptcy petition filing triggers an automatic stay — an order from the bankruptcy court that stops all collections proceedings where they are, for as long as the bankruptcy is still pending. That means the collections companies must stop calling, your creditors cant file suit, and the property tax foreclosure is put on hold. As long as the property hasnt gone to a foreclosure sale, that automatic stay buys you time to sort out and repay your tax debt, so you wont lose your home.

How Does A Tax Foreclosure Affect Your Tax Return If At All

When it comes to filing your tax return, a tax foreclosure, or any type of foreclosure for that matter, is considered by the IRS as a sale of real property. A regular home sale would through an escrow process, and the seller receives statements showing how much the home was sold for. But with a tax foreclosure, there is no escrow. The taxing unit takes possession of the house and sells it to the highest bidder to pay off the homeowners property tax debt.

Depending on the price the home was sold for, minus the amount of property tax judgment and all other fees and expenses, either results in a capital gain or a loss for the previous homeowner. The owner would then report it as such their tax return and pay income tax accordingly on any gains.

The County Charges Property Taxes Yearly

Owners of real property are obligated to pay property taxes at least once per year or, depending on the county, twice per year. The gathered taxes pay for services such as libraries, parks, schools, and more. The amount of property tax that a homeowner has to pay depends on the houses assessed value.

It is common for a servicer to include property taxes in the monthly mortgage payments and then pay those taxes on behalf of the homeowner via escrow. But if this is not the case, the homeowner is responsible for paying the property tax bill on their own.

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Can You Sell A Home That Owes Back Taxes Or With A Tax Lien

Yes, you may sell your home if you owe back property taxes or if there is a currently a tax lien on your property. However, the amount you owe will be deducted from your sale proceeds at the closing of the sale, just as your current mortgage would be deducted. These amounts are not added on top of the selling price, they are part of the selling price. Therefore, your equity in your home must be sufficient to cover the tax lien amount, as it needs to be paid before the new buyer can take over the title of the property.

Ways To Stop A Property Tax Foreclosure In Texas

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A property tax assessor-collector secures an interest in your property through a tax lien to ensure payment of taxes. If your property taxes remain unpaid, the tax assessor-collector has the legal right to pursue a property tax foreclosure of the lien and sell your home. The process normally begins with the filing of a tax suit by the attorney representing the tax assessor. If the taxes are not paid the tax suit will lead to a judgment foreclosing the tax lien and authorizing the sheriff to seize the property and sell it at public auction. Below youll see a picture of a sign placed in the yard of a property owner with a recent tax suit. Its not only embarrassing to drive home to this in your front yard but also alarming to realize you are one step closer to losing your property. The following are 4 options for stopping the foreclosure:

Option 1 Establish Repayment Plan with Tax AssessorSome tax collectors allow property owners to set up payment plans, which allow payment of delinquent taxes in installments. A tax collector is not required to offer this option, but when they do the repayment timeframes are typically short. When offered, payment plans can be a good solution for property owners who plan to pay their taxes off in a year or less. However, if the county has initiated property tax foreclosure proceedings, this option may no longer be available. Youll need to check with the tax assessor or their attorney to determine if payment plans are available.

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Chapter : Often Not Enough Help

But there are many situations when Chapter 7 does not solve the problem.

First, if a tax foreclosure is happening soon, you probably dont have enough time to catch up.

Second, even if theres no pending tax foreclosure you may need more help for the following reasons:

  • Even after discharging your other debts you wouldnt have enough money left over to satisfy your tax authority.
  • The tax authority doesnt provide a way to catch up, maybe because youve let the collection process go too far.
  • You had a deal to catch up earlier but just didnt have the cash flow to stick with it. Now they wont give you another chance.
  • Your mortgage lender requires you to bring the taxes current more quickly, on threat of its own foreclosure.

What Is A Tax Lien

A tax lien is a legal claim against the property of an individual or business that fails to pay taxes owed to the government. For example, when a landowner or homeowner fails to pay the taxes on their property, the city or county in which the property is located has the authority to place a lien on the property. The lien acts as a legal claim against the property for the unpaid amount that’s owed. Property with a lien attached to it cannot be sold or refinanced until the taxes are paid and the lien is removed.

When a lien is issued, a tax lien certificate is created by the municipality that reflects the amount owed on the property, plus any interest or penalties due. These certificates are then auctioned off to the highest bidding investor. Investors can purchase tax liens for as little as a few hundred dollars if it is a very small property. However, the majority cost much more.

Investors can purchase property tax liens from a municipality, allowing them as the new lien owner to collect payments with interest from the property owner. In some cases, they may foreclose and attain title to the property.

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What Is A Deed In Lieu Of Foreclosure How Does It Apply To Tax Foreclosures

A deed in lieu of foreclosure is a transaction between the homeowner and lender , where the homeowner voluntarily transfers the property deed to the lender in exchange for relief from their mortgage obligation. The bank then takes the property and sells it to pay off your mortgage loan. A deed in lieu of foreclosure is not an option for those facing a tax foreclosure and is limited to helping avoid mortgage foreclosures only.

How The Right To Redeem Usually Works

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In many states, the homeowner can redeem the home after a tax sale by paying the buyer from the tax sale the amount paid , plus interest, within a limited amount of time. Exactly how long the redemption period lasts varies from state to state, but usually, the homeowner gets at least a year from the sale to redeem the property.

In other states, though, the redemption period happens before the sale.

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Real Property Tax Forfeiture And Foreclosures

  • Real property tax delinquency entails a three-year forfeiture and foreclosure process in Michigan. Parcels are forfeited to the county treasurers when the real property taxes are in the second year of delinquency. Real property taxes which remain unpaid as of March 31 in the third year of delinquency are foreclosed upon by the Foreclosing Governmental Unit . The FGU is responsible for inspecting forfeited property, providing due process notifications and subsequent disposition of the tax foreclosed property. Beginning with the 2021 foreclosure auctions, those who hold interest in property at the time of foreclosure, may file to claim leftover proceeds for parcels which sell for more than the owing delinquency. Further details are available on our Auctions and Claimants webpage.

Tax Exemption And Deferral

After you receive the foreclosure notice, youll need to explain why you werent able to pay your taxes. You must submit a reason as outlined in the notification.

Talk to a tax attorney you can find a way out of the situation. Unpaid property taxes and foreclosure, in some cases, you can dispute the assessed value of your house. Perhaps, your home has been overvalued, and thats why your taxes are so high. You might be eligible for tax exemption and deferral. With proper negotiation, you can have the interest rate and penalties waived that will make it easier to pay the debt. Your tax attorney can guide you here.

There are also rescue loans available. They have less interest-rate, and you can use them to pay the taxes you owe. The point is to take action earlier, remember, before the final tax sale date, you can redeem your house and stop the foreclosure sale of your home. If you need assistance, please contact us. Our team can help you with this situation.

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How Far Behind Can You Get On Your Property Taxes Before They Can Foreclose

Taxing units usually mail their tax bills in October and are due upon receipt. If not paid by February 1, it becomes delinquent. As the new year gets nears, contact your local tax appraiser if you have not received a tax bill. Find out how much tax you owe and make sure your correct name and address are on record. Failure to receive a tax bill does not affect the validity of the tax, penalty or interest due, the delinquency date, the existence of a tax lien, or any action, including tax foreclosure, that the taxing unit may initiate to collect the taxes owed.

How To Stop Property Tax Foreclosure By Paying Owed Taxes

stop property tax foreclosure

To stop property tax foreclosure you will need to pay back the owed taxes. Depending on where you are in the property tax foreclosure process, you may either be able to spread out payments over a year, or youll need to make a single payment. If you dont have the necessary funds right away, there may be emergency loans available to help you meet tax deadlines, after which you can pay back the taxes over a longer period of time.

Some taxpayers may be eligible to apply for deferment of property taxes. Eligibility requirements are steep, and only some low income, disabled, veteran, or elderly applicants may be permitted to defer taxes.

Property tax deferment allows taxpayers more time to pay back the owed taxes. However, it cannot stop property tax foreclosure from moving forward once taxes are due.

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How To Stop Property Tax Foreclosure By Paying Your Owed Taxes Pending

Property Tax Foreclosure is a very serious thing. The property owner may lose their home to foreclosure if they do not pay the tax owed by December 31st of that year. And no payment plan has been established or agreed upon with your county office. You will receive a letter from your County Office telling you how much money you owe in back taxes for this year with an offer of a Payment Plan Agreement which needs to be returned within 20 days after receiving it.

Suppose nothing happens, then on January 16th . In that case, there is usually some public notice published in the newspaper / posted on bulletin boards at local Post Offices about the impending Property Foreclosure Sale. This means that the home goes up for Auction to cover all of your back taxes, interest, and penalties. If no one is interested in bidding on it , you will get a notice telling you that they will put it out for bid again but this time online through or, which means anyone can place bids on it.

Stop A Tax Lien Foreclosure

A Tax Forfeiture sale and tax lien foreclosure occurs when the taxing authority begins foreclosure proceedings due to unpaid property taxes. Property tax delinquency is a 3-year forfeiture and foreclosure process in the State of Michigan. Properties are forfeited to the county treasurers when the property taxes reach second year delinquency. If the property taxes remain unpaid as of March 31st in the third year of delinquency, they are foreclosed upon by the Foreclosure Government Unit .

If you have gotten behind on your property taxes and/or are facing a forfeiture auction or sale, you can immediately and legally stop the sale by filing a Chapter 13 reorganization plan. This is a legal means of creating structured repayment terms with your creditors. The Chapter 13 plan will:

  • Prioritize and Consolidate Your Debts:
  • Secured creditors, such as the County Treasurer or your mortgage lender, are paid immediately and before other lower priority creditors such as credit card or medical bills.
  • Unsecured creditors are deferred until you are caught up on payments to secured creditors.
  • Receive Legal Protection From Your Creditors and Their Actions:
  • Foreclosure

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The Best Way To Prevent Foreclosure Professional Property Tax Loans

A property tax loan company like American Finance & Investment Company, Inc can step in and give you a loan that covers your property taxes and delinquent property taxes in Texas no credit check or deposit required. This means fast, effective tax relief that allows you to keep your home and gives you the time you need to improve your cash flow. Our compassionate, skilled team will settle your bill quickly, stop the foreclosure process and structure your loan repayments to be as affordable as possible.

To pay your delinquent property taxes, get a loan estimate by filling the form below.

Are There Any Differences Between A Tax Foreclosure And A Mortgage Foreclosure

Avoid Property Tax Foreclosure

Homeowners who default on mortgage payments can have their properties foreclosed and sold at a bank auction. Homeowners who are delinquent on their property taxes can have their home foreclosed by a government entity. Both types of foreclosures are similar in that they both involve the repossession of property, but the auctions or sales of these foreclosure properties are different.

Mortgage foreclosure properties are sold at a bank auction and are designed to maximize the propertys auction sale price, so the foreclosing bank can recoup at least what it is owed. Tax foreclosure auctions are conducted at a local courthouse and are designed to net the foreclosing government the amount of the tax judgment they are owed. While mortgage foreclosures and sales return money to the lender, tax foreclosures and auctions return money owned only to the foreclosing government. You can find more information about the mortgage foreclosure process here.

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Important Information For Property Owners With Delinquent Taxes

On July 22, 1999, the Governor of Michigan signed Public Act 123 of 1999, which shortens the time property owners have to pay their delinquent taxes before losing their property under the process called tax reversion. Property owners with taxes that are 2 years delinquent will go through a foreclosure process and the property may be sold at public auction.

For an opportunity to review this law, click the following link: Public Act 123 of 1999

Those who fail to pay their 2015, & prior, delinquent property taxes will lose their property to foreclosure on April 2, 2018.

The time period to pay delinquent taxes has been reduced from 5 years to approximately 2 years. These are significant changes, thus, one of our goals is to ensure that your rights are protected.


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How Can I Stop A Tax Foreclosure

The Michigan tax foreclosure process is long, which means you have plenty of time to avoid a tax foreclosure if you can pay your property taxes. Here are a few ways to stop a tax foreclosure:

Pay Back Taxes in Year 1

If youre able, its best to pay back any missed taxes in the first year of tax delinquency. If you can pay before March of the second year, its a little easier to stop the foreclosure process. The county will add a 1% monthly interest rate to the amount you owe, but in the first year you can pay back those taxes gradually if youre unable to come up with all of the money at once.

Pay Back Taxes in Year 2

If you were unable to pay back the property taxes you owe in the first year, you still have a chance to avoid tax foreclosure. In year 2 of a Michigan tax foreclosure, your home is considered in the redemption phase.

According to the county, by not paying your property taxes you have forfeited your home. You can still live in your home at this point, but to redeem your home, you have to be able to pay back all taxes and fees in one lump sum.

Sell Your Home

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