Are Property Taxes Priority Unsecured?

I am trying to figure out if all or some of my past due property taxes are to be considered priority unsecured. I have read thru 11 U.S.C. § 507(a)(8) and am still unsure of this. 11 U.S.C. § 507(a)(8)(B) states "a property tax incurred before the commencement of the case and last payable without penalty after one year before the date of the filing of the petition". I take this to mean, that all property taxes that are incurred before filing, and were not assessed a penalty more than one year before filing, would be consider priority unsecured.

I owe 2008 property taxes on one property and 2007/8 on another. Until recently I just assumed that the property taxes would go with the house, since property tax foreclosure takes precedence over a lender foreclosure here in Michigan. I had already checked the none box on schedule E, until I saw a sample petition with property taxes listed. Can anyone please help me with this? Thanks.

Property Taxes are usually just secured. In many States, a statutory lien is placed on the property starting January 1st of the tax year. I really don't know what to put specifically for Michigan, I treated my property taxes as secured. In my case, the holder of a tax certificate also filed a secured claim.

It is an operation of underlying State non-bankruptcy law, as to whether property taxes are statutory liens and therefore secured by the property.

Besides, I think your issue is that you're reading about unsecured claims, 11 USC 508(a)(8), and most property tax assessments are statutory liens (secured) as far as I know. I don't know specifically for Michigan, but it is certainly true in much of the South.

I agree. I would place property taxes in the secured column. As they can be collected by placing a lien on or selling the home.

This info is from a trustee's guideline doc that I found. This is what is says on shedule E (priority unsecured claims):

"If a priority debt is fully or partially secured by a lien on the property (e.g. tax liens), list it only on Schedule D and don't repeat it here. Similarly if a claim is only partially a priority claim and partially an unsecured claim, list it only here."

So, the debt is not secured unless they have already placed a lien on the property. If there is no lien, then the debt is either unsecured or priority unsecured depending on the age of the debt. I don't think it counts for a debt to be subject to a potential lien.

So, the debt is not secured unless they have already placed a lien on the property. If there is no lien, then the debt is either unsecured or priority unsecured depending on the age of the debt. I don't think it counts for a debt to be subject to a potential lien.It's not a "potential" lien, it's a statutory lien which is an operation of underlying State non-bankruptcy law.

In North Carolina, for example, a statutory lien is in affect as of January 1st for property taxes in that same year, and in the amount of the prior year. So, you really do need to check how property taxes operate in your State. I say this, because some of these are by operation of law (statutory), and there may not be a "recorded" lien with the tax assessor.

Every (Chapter 13) plan I've read in Florida indicates that (county) property taxes are secured debt because of Florida Statute 197.122, which basically reads that...

All taxes imposed pursuant to the State Constitution and laws of this state shall be a first lien, superior to all other liens, on any property against which the taxes have been assessed and shall continue in full force from January 1 of the year the taxes were levied until discharged by payment or until barred under chapter 95....)