One common question in bankruptcy comes from filing debtors who may be facing a property tax lien and foreclosure on their property. They want to know if the automatic stay in their bankruptcy case will stop the foreclosure process. Continue reading
The guideline to use for determining general expense costs for a Chapter 13 plan are outlined in an IRS format. The IRS makes expense recommendations based on state to state living costs. Below, I have made a general check list of expense costs you might want to consider when devising your Chapter 13 plan. Continue reading
A recent study conducted by the AARP shows that between 1991 and 2007, the number of seniors over 65 years of age filed for bankruptcy protection at a rate that went up 150 percent when younger American’s filings were on the decline. Notice, those years did not include the Great Recession period when many more seniors filed for bankruptcy protection. Here is my take on why more seniors may be going into bankruptcy: Continue reading
Sometime, the only protection you have in keeping a home when debts overcome you is to file for bankruptcy protection. In light of the recent foreclosure crisis in America, it is a real shame what some state and local governments are starting to do to the elderly and disadvantaged in regards to property taxes. Are the property taxing authorities of governments inadvertently encouraging bankruptcy for our elderly and disadvantaged homeowners today?
According to the Associated Press, the elderly and other disadvantaged homeowners are losing their homes for as little as a few hundred dollars owed in back taxes. A recent report from the National Consumer Law Center (NCLC) released today was used to support these allegations. John Rao, the report’s author and an attorney for the NCLC, said that “arcane property tax laws and misinformation among consumers can cause some people to lose their homes for as little as $400 in back property taxes.”
Local governments supported through property taxes have the authority in most states to be able to attach tax liens on homes when property owners fall behind on their taxes. Most property taxes are paid through escrow accounts when there is still a mortgage on the property. A lot of the problems in keeping up with the payments on property taxes arise when there is no longer an escrow account and service provider to pay the annual taxes.
Rao believes that outdated state laws allow big banks and other investors to reap windfall profits by buying houses foreclosed on by tax liens at ridiculously low prices, often the cost for what is owed for taxes, and then reselling them for a huge profit. This more often than not happens to the elderly and disadvantaged homeowners. Rao said, “the consequences are devastating to individuals, families, and communities.”
With the weak economy squeezing tax revenue because of low property values, the local governments are clamping down on late tax payments. More homeowners are also having to fight the local authorities in tax evaluation annually to prevent their taxes from becoming too much to bare. The taxing authorities seem to have no shame when it comes to collecting what they consider their revenue.
The NCLC report suggested state governments should make it easier for homeowners to retake their homes after a tax lien sale, not harder; the states should limit the interest and penalties investors can charge; the states should increase court oversight; an installment plan should be considered to allow homeowners to pay back taxes; and homeowners should be given a clearer and fairer notice of understanding their rights under the current laws.
It is the opinion of this writer that it is becoming a national scandal and a shame for the local taxing authorities to behave in this manner, especially to the elderly, who should be facing their leisure years at home instead of years in the streets they might otherwise face.
Filing for bankruptcy protection might temporarily hold off the taxing authorities, but certain taxes are exempt from bankruptcy discharge. Shouldn’t it be that the elderly is exempt from certain property taxes?