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Do I still need to pay property taxes on a property that I surrendered in Chapter 7 Bankruptcy?
Anonymous3 views3 answers
I had lived in a house for 10 years when the mortgage payment and other bills became impossible to pay due to an extended unemployment period. I have recently filed Chapter 7 Bankruptcy and surrendered the property. For the past year, the bank has been paying for the property taxes on the property. I no longer live at the property and the house will eventually be foreclosed on. Is the property taxes paid by the bank part of the "deficiency" removed by the bankruptcy discharge? If not, what can the town, bank, or new owner do if I no longer own any real estate and live elsewhere (out of state)?
The property taxes paid by the bank are part of the deficiency for which you are discharged. The real estate taxes are not your responsibility, your obligation, nor are you liable for them.
Herbert WeinbergBankruptcy AttorneyNorth Andover, MAMA licensed ·
The answer given is correct. The issue you may want to consider with is that it is your house till the bank forecloses. If someone falls and trips, you are liable. The insurance the bank normally pays for in this situation does not protect you from this type of lawsuit. Accordingly, you may wish to rent the property to someone who will maintain the property and pay you enough to cover the cost of insurance.
I have had a number of clients in this situation rent the property and realize significant positive cash flow . In some cases, it has taken the bank a year or two to foreclose.
Real estate property taxes are against the property, not the owner. If the bank pays, the debt gets discharged. If the bank does not, the local government will have a better lien than the bank and when it forecloses, the bank's mortgage becomes worthless, which is why the bank usually pays the taxes - but that is to protect its interest. By filing bankruptcy, the lender's only recourse is to take the property, because it can not longer come after you for money. I agree that you need to keep it insured, and perhaps use a renter to cover the costs. I have had cases where it has taken the lender over three years to initiate foreclosure.
