Kentucky Bankruptcy Law

Counsel with Care

Delinquent Property Tax Claims in Chapter 13 Cases

In my practice, I have found it important to do just as this post advises: review claims filed carefully to make sure interest accrues only as allowed by law and for the attorney fees added in. Statue also guides the amounts that can be charged in attorney fees.

Furthermore, it is incredibly valuable to make sure the Debtor gets a copy of ALL active liens on their property just prior to filing the Chapter 13. And, after the bankruptcy is filed, to make sure the claims are filed on all of those liens. It just makes things nice and clean when the Chapter 13 concludes.

Chapter 13 Trustee, EDKY: Trustee's Blog

Property taxes on real estate in Kentucky constitute a statutory lien on the property. Under state law (KRS Chapter 134), the lien has priority over any other debt on the property. If the property were to be sold, property tax claimants are paid ahead of any mortgages or other liens. How should delinquent property tax claims be treated in a chapter 13 case? Practitioners first need to understand what happens to delinquent property taxes under state law.

When property taxes are unpaid as of April 15 and the sheriff files the uncollected tax claims with the county clerk, those unpaid tax bills, along with certain fees and costs, become certificates of delinquency which can be and frequently are sold to third party purchasers.

The purchaser of the certificate of delinquency is now the first priority lienholder. The lien secures not only the tax owed, but interest, penalties, fees, commissions, costs…

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January 26, 2017 Posted by | Uncategorized | Leave a comment