If you have fallen behind on your property taxes in Ohio, you may have considered filing for Chapter 13 bankruptcy. Chapter 13 can act as a lifeline for many Ohio residents facing substantial debt and is a common solution available to homeowners.
Are you considering filing for bankruptcy to stop tax foreclosure in Ohio? If so, check out this article, where we will discuss how Chapter 13 handles property taxes in Ohio.
What Happens When Property Taxes Go Unpaid?
Before we discuss how bankruptcy can impact tax debt in Ohio, what exactly happens if your property taxes go unpaid? Unfortunately, after failing to pay a certain amount of property taxes, it is very likely that you will start to accrue interest and penalties.
Ohio can also issue a tax lien, which can put your property at risk. And if you don’t address the unpaid property taxes as soon as possible, the final step Ohio will take is foreclosure.
So, if you have fallen behind on your property taxes in Ohio and have considered Chapter 13 bankruptcy, you need to get in touch with a Chapter 13 attorney in Ohio. An attorney can evaluate your situation to help you determine whether or not bankruptcy is the right solution.
How Chapter 13 Addresses Unpaid Property Taxes
Chapter 13 bankruptcy is a repayment plan type of bankruptcy that allows you to maintain your financial obligations as well as slowly pay back your debts over a 3 to 5 year period. Once your repayment plan comes to an end, any remaining dischargeable debts will usually be discharged, leaving you with a fresh financial start.
When you file for Chapter 13, an automatic stay immediately takes effect, protecting you from all collection efforts. Many homeowners use the automatic stay to protect them from mortgage foreclosure, but this also works the same way for tax foreclosures.
So, as long as you file for Chapter 13 before the sheriff’s sale of your property, the automatic stay will take effect and stop the foreclosure. Then you can begin your repayment plan, which will include all of your unpaid property taxes.
Keep in mind that your Chapter 13 plan will include your delinquent property taxes, as well as your regular monthly property taxes.
When is Chapter 13 the Right Option For Homeowners?
Although Chapter 13 can help you pay back property taxes and stop tax foreclosure, it isn’t an option you should take lightly. After all, bankruptcy can have some downsides, especially when it comes to how it impacts your short-term and long-term finances.
So, here are some examples of when Chapter 13 may be the right option for homeowners in Ohio:
- Stable income: Only homeowners who have a stable and dependable income should consider filing for Chapter 13. This is important because you will be responsible for maintaining your repayment plan; otherwise, your plan could go into default.
- Tax lien or foreclosure: Depending on the situation, you may have other resources that can help you pay back delinquent property taxes. However, if you already have a tax lien against you or foreclosure has started, Chapter 13 may be the only remaining option you have.
- Other debts: No matter the type of bankruptcy, this is something that you should only consider if you are in a substantial amount of debt with no other options. That is why homeowners should generally only consider Chapter 13 if they are behind on their property taxes in addition to having other forms of debt.
What to Do After Filing For Chapter 13
You will most likely feel a great deal of relief once you file for Chapter 13 to address property taxes. However, this is only the beginning since you will need to continue to do certain things to avoid running into issues.
Here are some steps homeowners should take after they have filed for Chapter 13 in Ohio:
- Create a budget: You must maintain your Chapter 13 repayment plan so that it stays active and doesn’t go into default. Because of this, you will most likely need to create a strict budget that allows you to keep up on these payments.
- Watch your credit: Although it will be some time before your Chapter 13 bankruptcy discharge, you should still prioritize rebuilding your credit. To do this, keep track of what your credit looks like in case of any errors and look for small ways you can start rebuilding credit.
- Build savings: If at all possible during your Chapter 13 plan, you should focus on putting aside some savings. Doing this can provide a safety net in case something changes in your finances or an unexpected bill comes up.
Also, if at any point during your Chapter 13 repayment plan your financial situation changes, you should request a plan modification.
FAQ Section
Can Chapter 13 stop a tax foreclosure?
Yes, as long as you file for Chapter 13 bankruptcy before the sheriff’s sale.
Can property tax be discharged?
Generally, no. Most types of taxes, including property taxes, aren’t dischargeable and will need to be paid in full either through Chapter 7 bankruptcy or a Chapter 13 repayment plan.
Will I keep my home?
Yes. As long as you follow the requirements for your Chapter 13 repayment plan, you can keep your home and continue to pay your current and past property taxes. However, if you fail to maintain your repayment plan, foreclosure proceedings could begin again.
Can I include other debts with my property taxes?
When you file for Chapter 13, you need to include all debts, which will become a part of your repayment plan. The benefit to this is that any remaining dischargeable debts after your repayment plan is paid may be discharged.
Hire a Bankruptcy Attorney in Ohio
If you have unpaid property taxes in Ohio, filing for Chapter 13 bankruptcy may be the right option for your situation. Richard P. Arthur, Attorney at Law, has extensive experience handling bankruptcy cases in Ohio and can help you decide if bankruptcy is the right option for your delinquent property taxes. To proceed with your case, contact us today at 937-254-3738 for a free consultation.