Real Estate Taxes

A chapter 7 will not allow a debtor to save their house, if they are behind with real estate taxes or mortgage payments. In a New Jersey chapter 7 bankruptcy case, real estate taxes must be paid if the debtor wishes to keep the house.
If real estate taxes are due to a township and/or a tax certificate owner, a chapter 7 will not save their house from a tax foreclosure action. Also, if a debtor is behind with mortgage payments, that includes escrow for real estate taxes, a chapter 7 bankruptcy filing, will not save their house from a mortgage foreclosure action.
However, in a New Jersey chapter 7, typically the debtor will not be personally liable for any real estate taxes, that are due prior to and/or after the filing. However, this does not mean that the debtor does not need to pay and keep the real estate taxes current, if they wish to keep the house. This means that the taxing authority, tax sale certificate holder, or mortgage company will not pursue the debtor for the money that is due, but can take the house through foreclosure, if the taxes are in default.
The bankruptcy laws do not permit the taking of the debtor’s real estate. If the debtor is behind with real estate taxes, the debtor is able to continue to reside in the house, until the mortgage company or tax sale certificate holder takes the house by foreclosure. The explanation of a tax sale and a tax sale certificate holder is set forth in a separate blog.
Robert Manchel, who is a bankruptcy lawyer in NJ., will answer questions regarding real estate taxes and how bankruptcy can help someone who is behind with real estate taxes at (866) 503-5655.

The payment of real estate taxes in a chapter 13 New Jersey bankruptcy case depends on whether the debtor (person filing) is keeping or surrendering their house in bankruptcy. If a person is keeping their house, all real estate taxes must be paid. In the alternative, if the debtor is surrendering their house, typically, the real estate taxes need not be paid.
The following is an explanation as to what happens with real estate taxes, if a debtor is keeping their house in a NJ. chapter 13. Any real estate tax arrears that are due prior to the bankruptcy filing, must be paid, through the bankruptcy plan, in addition to payment of the future real estate taxes that come due after the filing. The real estate taxes must be paid in this fashion no matter what creditor the taxes are owed to at the time of the filing. In other words, Real estate taxes may be paid through the mortgage payment or paid directly to the township. Also, real estate taxes may be due to a tax sale certificate holder.
If the real estate taxes are owed to the township directly and not the mortgage company, the debtor must pay the taxes to the township through the bankruptcy plan, while making quarterly payments to the township, after the filing. If the taxes are paid through the mortgage payments and are due to the mortgage company, the debtor must pay the tax arrears due prior to the filing, through the bankruptcy plan, while making future monthly mortgage payments.
If a debtor is surrendering their house in a chapter 13, typically, the debtor is not required to pay any real estate taxes.
Robert Manchel is a New Jersey lawyer that limits his practice to bankruptcy and mortgage foreclosure resolution, Mr. Manchel may be reached at (866) 503-5655.