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Bankruptcy and Property Taxes

by Erin B. Shank

One confusing and often complicated area of bankruptcy law is taxes. Not all tax obligations are dischargeable, and you need to know how this will affect your bankruptcy case if you owe any income or property taxes. Property taxes and real estate taxes can cost you a hefty chunk of change each year, depending on what you own and owe much you own. If you have found yourself in financial trouble, odds are those particular taxes present an additional debt you would like to wipe out as well. However, property tax and real estate tax debts are not automatically dischargeable. They must meet certain criteria before the bankruptcy court can eliminate the debt.

Your property and real estate tax debts must be unsecured. This means there can be no lien on the property, and there cannot be enough home equity available to pay off the tax debt. If some equity exists, this may be used to pay a portion of the debt, while the remaining unsecured debt may be discharged. Additionally, your tax debt must be payable without penalty within one (or sometimes two) year prior to filing bankruptcy.

If you have questions about bankruptcy and property tax debt, an experienced bankruptcy attorney can assist you in understanding your unique situation, applicable laws, and what type of bankruptcy is right for you. Bankruptcy can be a complicated systematic process, and it is important to have expertise and experience on your side.

erin b shank

I have been practicing exclusively bankruptcy law in Texas for almost 40 years. Unlike most other law firms, my firm is exclusively dedicated to helping individuals and small businesses find a way out of their financial difficulties through the use of our nation’s bankruptcy laws.

Associations & Awards
  • Client Companion Award | Erin B. Shank
  • Avvo Review Badge
  • Preeminent Award | Erin B. Shank
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  • state bar of texas
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  • Avvo Top Attorney Badge
  • GreaterWacoChamber
  • nacba
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