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How To Stop The Property Tax Sale Of Your Home With Bankruptcy

If you’re having financial challenges many debts fall by the wayside.  But one of the most potentially destructive debt obligations (when you fail to pay them) is property taxes. Failing to pay your property taxes or ad valorem taxes as they are known in Texas could result in a lien being placed against your home and eventual loss of your home.  But if you file bankruptcy you may be able to stop the process and save your home.  Here’s what you need to do:

  1. Assess how much you owe in property taxes.  Are you behind in your property taxes for less than a year or has it been piling up for a year or more? 
  2. Figure out if you are able to pay the property taxes now.  Do you have the cash right now to pay your property taxes? If so, you may want to go ahead and make the payment even if you think you’re going to file bankruptcy.  Property taxes are given priority status in bankruptcy and they have the highest lien statue allowed.  What that means is that if you file bankruptcy, the property taxes are going to be paid ahead of your other non-priority debts. Therefore it would probably be okay to go ahead and pay them even if you decide to file bankruptcy on your other debts unless you are going to file Chapter 13 bankruptcy. 
  3. If you cannot afford to pay the property taxes before you file bankruptcy, you may be able to stop the process of losing your home because of property taxes if you are able to pay the taxes with 30 days of filing a Chapter 7 bankruptcy. Or, if you are filing Chapter 13 bankruptcy you will be able to repay your property taxes over a 3 to 5 year period.