Confirm or not?

[C1957ici]

Good afternoon! My friend took out a property tax loan and due to health issues was not able to continue pay the loan. It started out at $5,400.00. They have added late fees and interest to $14,000. Now they have paid her 2020 taxes to the county ($3,500), added more fees, saying she now owes them $26,000. Her bankruptcy attorney said they had never seen that happen before in all their 40 plus years. Now they are saying her payment will go up $300 more per month. The property tax lender claims they have a code that enables them to do that???

[justbroke]

Welcome to BKForum.

I can't speak to Texas law, but tax certificates in Florida are relatively simple. The purchaser buys them at a rate already determined. It could be from 0.25% APR to 18.0% APR and no higher. Since I don't know how Texas tax certificates work, I don't know how a $5,400+$3,500 bill became $26,000. I would hope that her attorney would know the law and code.

If she has to pay the $26K in the bankruptcy, and the plan is 3 years, then that additional $12K does cost $333/month (over 36 months). From what I can tell, late paid property taxes, in Texas, can yield penalties amounting to 48% in just the first year alone. Because that property tax loan is a contract, your attorney would need to look to what the contract (and law) allow.

Anyhow, there's something strange going on and your friend really needs to have an attorney look at the terms of that tax loan, and whether the tax loan permits the lender to pay any future tax to protect their interest in the collateral (the property).

Yikes!