Glenn Stearns, Chapter 13 Trustee

 

TREATMENT OF REAL ESTATE TAXES IN A CHAPTER 13 PLAN


 

Unpaid property taxes that have not been sold are properly paid through the plan.  It is important the county receive notice of the filing of the bankruptcy case so that unpaid taxes will be held out of sale.

 

 

There is some debate concerning proper treatment of a tax purchaser in Chapter 13.

 

Some hold that sold taxes cannot be paid through the plan, that there is no debtor-creditor relationship between the homeowner and tax buyer. 

 

Others hold that the tax buyer is a creditor with a claim in the property owner’s bankruptcy and is properly paid through the plan as a secured creditor.

 

Judge Goldgar ruled that a tax purchaser is indeed a “creditor” with a “claim” in the bankruptcy: In re Alonzo and Joann Commings

 

If sold taxes will be redeemed directly, the plan must detail how and when it will occur in section G of the plan.  If the debtor budgets for this on schedule J, the plan payment must increase upon redemption. 

 

Generally, the debtor/homeowner must redeem sold taxes with certified funds within 30 months of the date of the first sale.

 

Real Estate taxes should be listed on schedule D and provided for in section E 3 of the plan.

 

Sold taxes to be paid through the plan would be listed on schedule D with notice to the county and the tax buyer and paid through E 3.

 

Verify the amount with the County Collector before you complete section E 3 of the plan.

 

 

Our office has contacted the Lake, Kane, DuPage and Will County Collector’s offices to determine how they treat past due property taxes including sold taxes, in a bankruptcy environment.

 

Click on the links below for details specific to each county.  Each link includes their remit to address, a contact name and phone number and  link to their web site.

 

DuPage County Real Estate Taxes                                 Kane County Real Estate Taxes

 

Lake County Real Estate Taxes                                        Will County Real Estate Taxes