Real Estate Tax

Bankruptcy Overview

Tax Certificate Holder/ Investor

Under the Bankruptcy Code, a tax lien for unpaid property tax is classified as a secured claim, meaning the debt is secured by the value of your property. In a Chapter 7 bankruptcy, secured claims are paid first through the sale of your assets, with property tax liens often taking priority over all other debt. Most tax debts cannot be eliminated in a Chapter 7 bankruptcy and must be repaid in a Chapter 13 bankruptcy. Generally, if you do not surrender your property to the bankruptcy court or trustee, you are still responsible for unpaid property taxes.

Investors may buy the tax certificates by paying all delinquent tax and fees due. If your tax certificate is sold, and bankruptcy is filed after a tax certificate sale you are required to make payments to the investor (via trustee) for unpaid property taxes. The investor can legally foreclose on your property if you fail to make payments. Filing bankruptcy can put a stop to the sale of your property’s tax certificate.

The Tax Collector is prohibited from attempting to collect your tax debt during bankruptcy proceedings as a result of the automatic stay that goes into effect as soon as you file for bankruptcy protection. If you include the property in the bankruptcy estate, the Tax Collector will look to the court-appointed bankruptcy trustee (Chapter 7) or to your repayment plan (Chapter 13) for collection of your debt. If your property has no equity and the trustee abandons it, the Tax Collector looks to the property itself for collection of the debt, in accordance with Florida statutes.