Can I wipe out the property tax?

[mhman]

I searched threads but I couldn't find a clear answer.

As far as I know, the federal tax can't be wiped out through BK.
But how about the property tax? I am planning to file BK in December. If I receive the property tax bill this November, can I include it in BK as well?

I am living in California and planning to surrender the house. Thanks in advance.

[bluemartini]

I searched threads but I couldn't find a clear answer.

As far as I know, the federal tax can't be wiped out through BK.
But how about the property tax? I am planning to file BK in December. If I receive the property tax bill this November, can I include it in BK as well?

I am living in California and planning to surrender the house. Thanks in advance.

Wow... I didn't know you had to include property taxes in BK. Geeze... one more thing to ask my lawyer about!

[bkmaggster]

I searched threads but I couldn't find a clear answer.

As far as I know, the federal tax can't be wiped out through BK.
But how about the property tax? I am planning to file BK in December. If I receive the property tax bill this November, can I include it in BK as well?

I am living in California and planning to surrender the house. Thanks in advance.

I think the property tax stays attached to the house. So whoever gets it after foreclosure has to pay the taxes current.

If you keep the house, I think you have to pay the taxes. Hopefully someone who knows will come along and tell you!

[justbroke]

As far as I know, the federal tax can't be wiped out through BK.

Federal tax can be discharged under certain conditions. The key being that the tax is more than 3 years old (before it became due without penalty), you filed your return more than 2 years before filing, and it wasn't from an assessment by the IRS in the 240 days preceding the filing of the Bankruptcy. There are more complications if the IRS has levied against real or personal property.

But how about the property tax? I am planning to file BK in December. If I receive the property tax bill this November, can I include it in BK as well?

The answer isn't so simple. Property taxes, in every State that I know of, create a super-lien that is automatically placed by statute (law) on January 1st of the year in which it is assessed. In other words, a super-lien is automatically on your home for 2009 property taxes, and has been there since January 1, 2009. While Bankruptcy could remove your personal liability for the tax, the tax would stay with the property (as a lien). In order to keep the property, you would need to pay the tax. Remember, all liens survive bankruptcy (with very few exceptions).

I am living in California and planning to surrender the house. Thanks in advance.

If you're surrendering your home, then you have nothing to worry about. The taxes are attached to the home. When you surrender the home, the Bank will foreclose upon the home and pay the taxes in order to get a clean title. This is normal procedure.

As to what you include on your Bankruptcy schedules... it's all debt. Property taxes is a debt, so you would include them on one of the Schedules. Depending on whether it's entitled to priority or not, could be dependent on your State... but I leave that for some other discussion. I placed my property taxes on Schedule D (Creditors Holding Secured Claims).

[mhman]

Thanks for all your answers.
"Justbroke", you always provide a good answer. I really appreciate it.

Anyway, it sounds like I don't have to pay the property tax this December. (Actually I am not afford to pay it after the attorney fees.)

I am planning to retain an experienced attorney but he charge $2200 including all filing fees and addtional $800 IF he needs to submit a motion to keep my home business.

This $800 is just in case the Trustee requests to close my business through Chapter 7. I don't know what this means but he is very experienced so I think it's worth to pay more than other attorneys.

BTW, this is a really good news since I will surrender the house. Thanks again for the good info.

[Moneypenny]

back when i first consulted a lawyer about bk in CA (but didnt go through with it) he told me not to pay my property tax, and i was keeping my house. this seemed quite routine to him. i dont know why. but this is a very knowledgeable lawyer.

[justbroke]

back when i first consulted a lawyer about bk in CA (but didnt go through with it) he told me not to pay my property tax, and i was keeping my house. this seemed quite routine to him. i dont know why. but this is a very knowledgeable lawyer.

That was on a consult? Did you ever file? What did you actually do?

This depends on some factors including whether the tax was more than a year old prior to filing, whether or not the property tax has affixed as a lien on the property (statutory), and whether a tax certificate was issued as a lien on the property.

As always, consult an attorney to see what your specific condition is and whether your particular tax (federal, state, local, property) is dischargeable. The real problem with taxes and dischargeability, comes when there is an associated lien against some tangible property.

[HHM]

...

[Flamingo]

If you have a mortgage on your property, does the mortgage company collect escrow for taxes and insurance? In that event, the mortgage company receives your tax bill (you get a copy usually) and the mortgage company pays the taxes out of your escrow. I am assuming from your posting that if you have a mortgage, you are behind on payments so therefore, if you do escrow for these amounts, any escrows you have for these items may be frozen. Or you have the insurance and property bills sent directly to you for payment. Just wondering cause if you are not behind or that behind in payments, depending on when your bill is due and you escrow insurance/mortgage funds, the mortgage company could send out the payment from your escrow prior to any due date.

[Moneypenny]

The lawyer did not ask any questions about all that. He was the senior, owner of the lawfirm and it is a good one.

I did not pay the tax, but then decided not to file at that time. I got letters from my first mortgage saying i need to pay and to provide them proof (I paid up later, but did not provide proof-- they like to blow hot air).

I think those of you who are knowledgeable can deduce from all this what the nature of the prop tax is for me. But I agree if you think it is hard to understand what the lawyer was thinking. It was like checking a box for him, seemed like a no-brainer.

Next time around I am planning on paying the prop tax no matter what he says because our schools need it here in CA

Moneypenny

[Flamingo]

The lawyer did not ask any questions about all that. He was the senior, owner of the lawfirm and it is a good one.

I did not pay the tax, but then decided not to file at that time. I got letters from my first mortgage saying i need to pay and to provide them proof (I paid up later, but did not provide proof-- they like to blow hot air).

I think those of you who are knowledgeable can deduce from all this what the nature of the prop tax is for me. But I agree if you think it is hard to understand what the lawyer was thinking. It was like checking a box for him, seemed like a no-brainer.

Next time around I am planning on paying the prop tax no matter what he says because our schools need it here in CA

Moneypenny

There is a difference between consulting with a lawyer and retaining one. Many people in this forum can tell you the various and differing things told to them about any one question they had posed to different consulting attorneys. Many received different answers to the same question. Is the lawyer you are planning on retaining the same one that gave you this advice previously? If this is a different attorney, have you consulted with him/her yet? If not, don't pay anything until you question this lawyer thoroughly.

If you can't afford to pay the property taxes you can't afford to pay the property taxes - simple as that, and if you are letting the house go and filing soon, it is basically a no brainer but I would have all my ducks in one row and check with the attorney who you plan on retaining since it appears you also have a business involved which may make your BK a bit more complicated.

Best of luck to you...

[justbroke]

...

I concur.

[Moneypenny]

sorry not trying to hijack the thread: someone asked some questions of me. i am not the original poster and i dont have a business. I dont have a question here I was just "mixing things up" because a very good lawyer told me not to pay, and seeing what the knowledgable people here would say about that. just encouraging the production of knowledge.

i am definitely not recommending one doesnt pay prop tax and i intend to do so even if my lawyer says i dont have to.