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Property Tax after Chapter 7 Filing in Tennessee


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#1 Emiller3

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Posted 15 November 2012 - 06:27 AM

I filed Chapter 7 in May of 2011, of course gave up everything including the House. The Robertson County Trustee is harassing me to pay property tax for the 4th quarter of 2011 and for 2012. My question is, am i required to make these payments on property tax for a home I moved out of the month I filed Chapter 7?

#2 adjusterjack

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Posted 15 November 2012 - 06:54 AM

I think property taxes are not dischargeable in bankruptcy.

Ask your bankruptcy attorney.

One thing you might want to check, though, is when the ownership of the house changed to the bank or to the next owner. You can check that on the county recorders website.

Taxes might be payable in installments but they are charged for a full year.

You filed in May but any action on the foreclosure would have been held up till after discharge, say, in November, so you might be on the hook for the whole tax year for 2011.

And if foreclosure wasn't finalized until after the first of the year you might be on the hook for 2012.

I'm guessing at all this.

You need to talk to your attorney about whether the taxes were discharged or not.

And if they weren't, get some expert help from a tax pro who knows how your local property taxes work so you can see if you have any way out.

Warning: Legal issues are complicated. Explanations and comments here are simplified and might not fully explain the ramifications of your particular issue. I am not a lawyer. I do not give legal advice. I make comments based on my knowledge and experience. I guarantee nothing. If you act on my comments without the advice of an attorney, you do so at your own risk.


#3 Guest_FindLaw_Amir_*

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Posted 15 November 2012 - 10:21 AM

This is a matter you may wish to consult with a local Tennessee Bankruptcy Lawyer for clarification.

#4 Tax_Counsel

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Posted 15 November 2012 - 11:11 AM

I think property taxes are not dischargeable in bankruptcy.


Most property taxes are dischargeable. The rule is that UNSECURED property taxes are not dischargeable in bankruptcy if they were incurred prior to the commencement of the bankruptcy case and were last payable without a penalty after one year before the date of filing the petition. 11 U.S.C. ยงยง 523(a)(1) and 507(a)(8).

Most real property taxes are secured by a lien on the property at the time of the assessment or shortly thereafter, and those secured taxes would be eligible for discharge (and for good reason, since the government may collect what is owed from the sale of the secured property). Even if not secured, if the tax liability is old enough to have incurred a penalty more than a year before filing, it would also be eligible for discharge.

Of course, a discharge in a Chapter 7 case only applies to obligations (including eligible taxes) owed as of the date the petition is filed. Obligations incurred after the petition are not included in the bankruptcy and not eligible for discharge. Although the OP did not specify in what state the property was located, a property tax bill for 2012 taxes was not likely owed prior to the filing of the bankruptcy in May 2011. If the tax was imposed after the petition was filed, it would not be discharged in the bankruptcy.

#5 mscash

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Posted 03 January 2013 - 01:03 PM

Unpaid property tax will follow the property, not the owner. When whoever owns it now, including the lender, sells it to a "user" the property tax will have to be paid as part of the sale.

#6 Tax_Counsel

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Posted 03 January 2013 - 01:55 PM

Unpaid property tax will follow the property, not the owner.


In many states, the property tax is not only a lien on the property (which is why subsequent owners are motivated to pay property taxes that accrued before they owned it) but are also a personal liability of the owner of the property as of the assessment date. While it is not common to see a tax collector pursue the former owner for payment since the collector can resort to sale of the property to collect, the tax collector may go after the former owner as an alternate means of collecting the tax.




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