Wayne County, Michigan, has proceeded with another mass foreclosure on homeowners who have failed to pay delinquent property taxes. If you or someone you know has a pending foreclosure, it is not too late to file bankruptcy to stop the foreclosure. An experienced bankruptcy lawyer can walk you through the process of saving your home from tax foreclosure.
Typically, a bankruptcy lawyer must file your case prior to the foreclosure taking place. However there are certain times where the tax foreclosure can be stopped even after the final foreclosure date.
Chapter 13 offers a repayment plan where the homeowner pays the full amount owed for property taxes plus interest, which can be as high as eighteen percent. Unfortunately, Chapter 7 will not assist in eliminating property taxes, which run with the property, and therefore the lien remains.
Your bankruptcy lawyer should walk you through all required payments including interest and trustee fees. Due to high property taxes in the City of Detroit (ratio of property value to tax is much higher than in surrounding suburbs), it may not be worth it to attempt to save the home through bankruptcy. We have seen many cases where the property taxes owed were higher than the house is worth. On top of that, homeowners still have ongoing property taxes for future years they will have to pay out of pocket.
If you do not want the property that is being foreclosed upon, you always have the option to let the foreclosure continue. Most property taxes are not personal liabilities, meaning the county can never come after the homeowner personally. A bankruptcy lawyer can tell you better the liability you may incur from allowing your home go into foreclosure.
For more on the mass property tax foreclosure, see NPR’s recent article:
In Detroit, tens of thousands of people are facing a deadline Tuesday that could cost some of them their homes. That’s when homeowners have to make arrangements to either pay delinquent property taxes — or risk losing their home at a county auction.
When Detroit emerged from bankruptcy last year, it did so with a razor-thin financial cushion. It desperately needs every bit of tax revenue it can muster.
Earlier this year, county officials sent out 72,000 foreclosure notices to homeowners behind on property taxes — 62,000 of them in Detroit alone. They say about 18,000 of these properties are occupied, but fewer than half of those homeowners have paid all of their tax.
So officials like City Councilman Gabe Leland are knocking on doors in Detroit neighborhoods, reminding residents that the window to pay taxes is quickly closing.
With Detroit’s high unemployment and poverty rates, it’s not hard for Leland to find residents facing foreclosure — or who know someone that is.
“It’s scary,” he says. “Seventy-two thousand in Wayne County, thousands of those here in the city of Detroit. This is a crisis. And you know — city, county — we don’t want these properties … we want people to stay in their homes. And this is gonna put people on the street.”
Leland supports a moratorium on foreclosures to give homeowners more time to pay taxes or have property values reassessed.
But Wayne County Deputy Treasurer Eric Sabree says a moratorium is out of the question because Detroit’s property tax revenue is already spoken for.
NPR: http://www.npr.org/2015/03/30/396317153/mass-tax-foreclosure-threatens-detroit-homeowners
