What bankruptcy will cancel property tax debt? 2 Answers as of April 30, 2013I was told a few days ago that I am being foreclosed on May 1st, 2013. I have already moved out months ago and have been trying to sell my home for 6 months with no luck. I was told I can do a deed in lieu of foreclosure but that the house has to go into foreclosure proceedings first before I have the option of handing in my deed. Of course, I don't want to get stuck owing anything after I hand in my deed. I have a decent amount of equity in my home and I am not underwater. It is just that I don't have any income right now and can't pay any bills. I will have to file bankruptcy but since I don't want to keep my home do I file chapter 7 or chapter 13? I have credit card debt and I owe 2 property tax payments. I was told that handing in my deed does not cancel property tax debt.
William S.Wolfson Esq.,LLC | William S.Wolfson
The filing of a Chapter 7 bankruptcy will have no impact n your tax debt for the real property taxes on your home. You have no personal liability for your property taxes. They are a lien that "runs with the land". Whoever has legal title to the house has to pay the property taxes in order to avoid a tax sale certificate being sold by the Town for back taxes. The town cannot get a money judgment against you and garnish your wages or take money out of your bank account involuntarily. If you file a Chapter 13 you can get an additional period of time to sell your house, stop the foreclosure and perhaps get to keep some of the equity ( up to $22,975.00 if you are selling your principal residence plus another $1,175 if the circumstances are right) from the money you see at closing to help you move and get a fresh start in life. The property taxes will be paid off at the closing table. The credit card debt and the property taxes can be paid. My experience is that a Chapter 13 trustee will allow six months in a Chapter 13 plan for a home sale. You can pick the broker you want to use and control the sale price subject to what a buyer is willing to pay. A Chapter 7 will probably give the same result to you and stop the foreclosure but the difference is that a Chapter 7 trustee will sell the house. The real property taxes will be paid when the home is sold. I assume that the May 1,2013 date is when the foreclosure law suit will start and not a sheriff's sale .A sheriff's sale comes about 18 to 36 months after the lawsuit for foreclosure is stated. The law recently changed so foreclosures can be speed up if the home is empty. Be sure to contact the sheriff of the county where your home is to be sure they do not have a sale scheduled. Once a sale occurs you will have lost the ability to see any money from the home for yourself or to have sales proceeds to pay your credit card debt. All forms of bankruptcy will stop a sale if one is scheduled. Since you have some equity in the home and credit card debt, you will certainly benefit from speaking with a competent bankruptcy lawyer.
Answer Applies to: New Jersey