Blogs
By: Steven P. Taylor, Indiana bankruptcy attorney on January 30, 2014
Posted in Chapter 13 Bankruptcy
On January 7, 2014, the 7th Circuit court of appeals issued an opinion that is a fantastic boon for struggling real estate property owners that have not been able to pay their real estate property taxes timely and have had those delinquent real estate taxes sold at a tax sale. These sale are conducted by municipalities who, after waiting the time period required by state law, those unpaid property taxes up for auction (generally called the “tax sale”). In Indiana, it’s about 15 months before a “property goes to a tax sale.” The tax sale is bid competitively, meaning high bid wins. Unfortunately, Indiana has the reputation for being an excellent state for tax lien certificate sales for all of the wrong reasons. First, he interest rate on the bid that must be paid to redeem the property is high (as high as 25%) is high and the redemption period of 1 year is very short.
Currently, under Indiana law, a tax lien purchaser in a tax sale gets a return on the investment in one ways: interest on the bid amount, or eventual ownership of the property.
A. Interest on Bid (Redemption of Tax Sale Certificate)
If property for which a tax lien purchaser bought a tax sale certificate is redeemed during the redemption period, the tax lien purchaser surrenders the tax sale certificate upon that redemption, tax lien purchaser will receive a refund equal to one hundred ten percent (110%) of the minimum bid for which the tract or real property was offered at the time of sale, if the tract or item of real property is redeemed not more than six (6) months after the date of sale; or one hundred fifteen percent (115%) of the minimum bid for which the tract or real property was offered at the time of sale, if the tract or item of real property is redeemed more than six (6) months but not more than one (1) year after the date of sale. In addition to the refund of the minimum bid plus the above stated interest thereon, in the case of a redemption, the tax lien purchaser, upon surrendering a tax sale certificate, will receive a refund of the amount by which the purchase price exceeds the minimum bid (called the overbid), if any, on the real property plus ten percent (10%) per annum on the overbid. I.C. §6-1.1-25-2 governs the amount required to redeem.
EXAMPLE:
Assume that an Indiana homeowner owed $500 in unpaid property taxes on a property that went to tax sale. A $5,000 offer is the winning bid at the auction. If the homeowner redeems his property the day before the one year redemption period expires, per Indiana law, the minimum, he’ll owe the tax lien purchaser is the initial $500, plus a 15 percent penalty, totaling $$565.00. He’ll also be required to pay 10 percent interest on the overbid ($4500.00), or $450. As the tax lien purchaser, you’ll get your capital investment of $5,000 back, plus $65.00 plus interest payment of $450.oo on the overbid for a total of $5,515.00.
B. No Redemption
Generally, about three quarters (3/4) of real estate owners redeem their real property within a year. However, if an interested party fails to redeem the property, the winning bidder can petition the Court, upon the expiration of the redemption period, to have a tax deed issued as to the property. Once it’s complete, tax lien purchaser takes ownership.
Typically, in Indiana, this accelerated and short redemption period is an extreme hardship on struggling Indiana homeowners that are attempting to save their home in these harsh times. In the above example, it would require a homeowner to save an additional $459.58 a month to be able to pay the redemption amount and save the residence at the minimum. To date, homeowners have had to hope that the mortgage company would come in and protect its lien. However, the mortgage company wants its money it paid out on the tax lien redemption and will declare an escrow shortage (because that is where the money came from) and require the homeowner to pay that escrow shortage over a twelve (12) month period.
However, In Re Lamont, the Seventh Circuit changed the tax lien certificate landscape. The debtor in this Chapter 13 case filed a bankruptcy before the redemption period ended. The plan provided for payment of the delinquent taxes at zero (0) percent interest over the plan life. The tax lien purchaser (which was not listed originally on the schedules) became aware of the bankruptcy when the state court refused to issue a tax deed due to the bankruptcy. The tax lien purchaser asked the bankruptcy court to modify the stay to allow him to obtain a tax deed. The bankruptcy court refused and appellate proceedings ensued. Specifically, the Court held that for debtor that filed a Chapter 13 bankruptcy before the expiration of the redemption period that the tax lien was a (1) non-recourse secured claim against the real estate owner’s property; and (2) the claim was modifiable in a Chapter 13 bankruptcy; and, (3) the automatic stay applies to prohibit the tax lien purchaser from attempting to procure a tax deed during the plan; and (4) the tax lien purchaser’s ability to obtain a tax deed is extinguished by the successful completion of the Chapter 13 plan and discharge.
Given the difficulties that Indiana homeowners have in redemption due to the short redemption period and high interest, the Seventh Circuit’s holding is a blessing. Unfortunately, this stance will require that an experienced bankruptcy attorney will be required to make sure that proper parties are noticed and the bankruptcy plan has the appropriate language. However, Indiana homeowners with delinquent real estate taxes have gained breathing room to reorganize and save the real estate. Potentially, this means that an individual whose real estate taxes were sold at a tax sale has the one (1) year redemption period (minus one day) plus the five year Chapter 13 plan life to pay the delinquent property taxes. Since the tax lien purchaser’s secured claim is modifiable, the interest rate can modified to a market rate (usually Prime to Prime plus 3%), vs the statutory rates in effect at redemption.
When I’m visiting with you by phone or in my Kokomo or Indianapolis bankruptcy law office, one thing I’ll want to find out is when your redemption period ends and call the county treasurer to ascertain the redemption amount. Once we have those facts, you will be surprised at how we can help you keep your home and other real estate in Chapter 13 Bankruptcy.
[contact-form]
Filed under: Chapter 13 Bankruptcy Tagged: bankruptcy attorney, Chapter 13 Bankruptcy, Delinquent real estate taxes, Indianapolis Chapter 13 bankruptcy, Kokomo Chapter 13 bankruptcy, Redemption Period, Tax Lien Certificates 
By: Steven P. Taylor, Indiana bankruptcy attorney on January 30, 2014
Posted in Chapter 13 Bankruptcy
On January 7, 2014, the 7th Circuit court of appeals issued an opinion that is a fantastic boon for struggling real estate property owners that have not been able to pay their real estate property taxes timely and have had those delinquent real estate taxes sold at a tax sale. These sale are conducted by municipalities who, after waiting the time period required by state law, those unpaid property taxes up for auction (generally called the “tax sale”). In Indiana, it’s about 15 months before a “property goes to a tax sale.” The tax sale is bid competitively, meaning high bid wins. Unfortunately, Indiana has the reputation for being an excellent state for tax lien certificate sales for all of the wrong reasons. First, he interest rate on the bid that must be paid to redeem the property is high (as high as 25%) is high and the redemption period of 1 year is very short.
Currently, under Indiana law, a tax lien purchaser in a tax sale gets a return on the investment in one ways: interest on the bid amount, or eventual ownership of the property.
A. Interest on Bid (Redemption of Tax Sale Certificate)
If property for which a tax lien purchaser bought a tax sale certificate is redeemed during the redemption period, the tax lien purchaser surrenders the tax sale certificate upon that redemption, tax lien purchaser will receive a refund equal to one hundred ten percent (110%) of the minimum bid for which the tract or real property was offered at the time of sale, if the tract or item of real property is redeemed not more than six (6) months after the date of sale; or one hundred fifteen percent (115%) of the minimum bid for which the tract or real property was offered at the time of sale, if the tract or item of real property is redeemed more than six (6) months but not more than one (1) year after the date of sale. In addition to the refund of the minimum bid plus the above stated interest thereon, in the case of a redemption, the tax lien purchaser, upon surrendering a tax sale certificate, will receive a refund of the amount by which the purchase price exceeds the minimum bid (called the overbid), if any, on the real property plus ten percent (10%) per annum on the overbid. I.C. §6-1.1-25-2 governs the amount required to redeem.
EXAMPLE:
Assume that an Indiana homeowner owed $500 in unpaid property taxes on a property that went to tax sale. A $5,000 offer is the winning bid at the auction. If the homeowner redeems his property the day before the one year redemption period expires, per Indiana law, the minimum, he’ll owe the tax lien purchaser is the initial $500, plus a 15 percent penalty, totaling $$565.00. He’ll also be required to pay 10 percent interest on the overbid ($4500.00), or $450. As the tax lien purchaser, you’ll get your capital investment of $5,000 back, plus $65.00 plus interest payment of $450.oo on the overbid for a total of $5,515.00.
B. No Redemption
Generally, about three quarters (3/4) of real estate owners redeem their real property within a year. However, if an interested party fails to redeem the property, the winning bidder can petition the Court, upon the expiration of the redemption period, to have a tax deed issued as to the property. Once it’s complete, tax lien purchaser takes ownership.
Typically, in Indiana, this accelerated and short redemption period is an extreme hardship on struggling Indiana homeowners that are attempting to save their home in these harsh times. In the above example, it would require a homeowner to save an additional $459.58 a month to be able to pay the redemption amount and save the residence at the minimum. To date, homeowners have had to hope that the mortgage company would come in and protect its lien. However, the mortgage company wants its money it paid out on the tax lien redemption and will declare an escrow shortage (because that is where the money came from) and require the homeowner to pay that escrow shortage over a twelve (12) month period.
However, In Re Lamont, the Seventh Circuit changed the tax lien certificate landscape. The debtor in this Chapter 13 case filed a bankruptcy before the redemption period ended. The plan provided for payment of the delinquent taxes at zero (0) percent interest over the plan life. The tax lien purchaser (which was not listed originally on the schedules) became aware of the bankruptcy when the state court refused to issue a tax deed due to the bankruptcy. The tax lien purchaser asked the bankruptcy court to modify the stay to allow him to obtain a tax deed. The bankruptcy court refused and appellate proceedings ensued. Specifically, the Court held that for debtor that filed a Chapter 13 bankruptcy before the expiration of the redemption period that the tax lien was a (1) non-recourse secured claim against the real estate owner’s property; and (2) the claim was modifiable in a Chapter 13 bankruptcy; and, (3) the automatic stay applies to prohibit the tax lien purchaser from attempting to procure a tax deed during the plan; and (4) the tax lien purchaser’s ability to obtain a tax deed is extinguished by the successful completion of the Chapter 13 plan and discharge.
Given the difficulties that Indiana homeowners have in redemption due to the short redemption period and high interest, the Seventh Circuit’s holding is a blessing. Unfortunately, this stance will require that an experienced bankruptcy attorney will be required to make sure that proper parties are noticed and the bankruptcy plan has the appropriate language. However, Indiana homeowners with delinquent real estate taxes have gained breathing room to reorganize and save the real estate. Potentially, this means that an individual whose real estate taxes were sold at a tax sale has the one (1) year redemption period (minus one day) plus the five year Chapter 13 plan life to pay the delinquent property taxes. Since the tax lien purchaser’s secured claim is modifiable, the interest rate can modified to a market rate (usually Prime to Prime plus 3%), vs the statutory rates in effect at redemption.
When I’m visiting with you by phone or in my Kokomo or Indianapolis bankruptcy law office, one thing I’ll want to find out is when your redemption period ends and call the county treasurer to ascertain the redemption amount. Once we have those facts, you will be surprised at how we can help you keep your home and other real estate in Chapter 13 Bankruptcy.
[contact-form]
Filed under: Chapter 13 Bankruptcy Tagged: bankruptcy attorney, Chapter 13 Bankruptcy, Delinquent real estate taxes, Indianapolis Chapter 13 bankruptcy, Kokomo Chapter 13 bankruptcy, Redemption Period, Tax Lien Certificates 
Bringing you the most up-to-date news, tips and blogs throughout the web. Here’s your Bankruptcy Update for January 30, 2014 Toni Braxton Buys $3 Million Mansion After Filing For Bankruptcy Hospital bankruptcies a result of trends, not a single event WR Grace’s bankruptcy exit financing deal gets court approval
Filing for bankruptcy doesn’t have to mean you’ve given up on your finances. You don’t have to keep struggling in figuring out how you will meet necessary financial obligations month after month. Chapter 7 bankruptcy can help you wipe out debts while Chapter 13 bankruptcy can help you pay them with an affordable repayment plan. [...]
Our firm is launching a Seattle Bankruptcy website as the first in a series of city specific bankruptcy law websites. The idea is that people living in Seattle, Washington probably don’t want to wade through articles about Portland bankruptcy hearings and trustees and vice versa. The first of these sites is going to be geared towards Seattle area prospective bankruptcy clients. The site can be found at http://www.seattle-bankruptcyattorney.net
The site is just starting up and far from finished but it should ultimately be helpful to people contemplating bankruptcy in the Seattle area. I look forward to launching sites geared only towards people living int the Vancouver, Washington area as well as city specific ones for people living in Portland and Salem, Oregon.
The original post is titled Seattle Bankruptcy Attorney Website , and it came from Oregon Bankruptcy Lawyer | Portland, Salem, and Vancouver, Wa .
Etiquette experts say that sex, politics and religion are subjects to be avoided at dinner parties.
I’d add one more subject to that list – money.
Nobody wants to talk about their money problems except with their closest friends and loved one – and sometimes, not even with that intimate circle of confidantes.
That’s why people who are thinking about filing for bankruptcy are worried about the possibility that word will get out.
I’m here to tell you it probably won’t happen. In fact, most people probably will never know that you filed for bankruptcy unless you tell them.
Here’s why.
Nobody Goes To The Courthouse
Your bankruptcy filing is a court record, which can be pulled up on the court’s system.
That court system, PACER, can be accessed by anyone at no cost. But record searches are charged at a fee of $0.08 per page.
Someone could go to the courthouse and do a search at no cost, but most people don’t do that.
Why? Because most people don’t want to take the time to do so.
Beyond that, most people don’t even know about PACER unless they’ve got a case of their own.
Related:
Neighbors Can’t Check Your Credit Report
Your bankruptcy case will show up on your credit report for a period of time; creditors will know about it, but that’s pretty much as far as it goes.
In order to get a copy of your credit report, someone must have a permissible purpose. Nosy neighbors don’t have a legitimate reason for peeking your credit report, so you’re in the clear.
Related:
Won’t It Be In The Newspaper?
In Los Angeles, no newspapers publish the names of individuals who file for bankruptcy.
In New York City, none of the major daily newspapers publish bankruptcy information.
Most cities don’t publish listings of local people who filed for bankruptcy, so you’ve got nothing to worry about if you’re in a major metropolitan area.
People Care About Themselves More Than They Do About You
It’s tough to admit, but the person who cares about you the most is … well, you.
Everyone care more about their own problems, their own issues, and their own wallet. They’ve got barely enough time to get through their own mental to-do lists each day without mucking around in your business.
Neighbors, friends, coworkers, and looky-loos won’t spend time or money to snoop into your private life. They won’t go out of their way to find out about your bankruptcy, and they sure won’t actively seek out your financial information.
You’re going to need to get over your bill problems without prying eyes over your shoulder. And that’s not a terrible thing, is it?
Vince Young, 30, former NFL quarterback for the Texas Titans filed for Chapter 11 bankruptcy. Just over a year ago there were reports Young was running out of money even though he signed a contract that would guarantee him $26 million. He filed his petition in Houston federal bankruptcy court while battling lawsuits against him [...]
Chapter 13 Bankruptcy – Payroll Control In some jurisdictions, payroll control is mandatory. This is where the money to pay your Chapter 13 trustee is deducted by court order out of your pay. Now, payroll control can only work if you have a job. If you are self-employed, or if you are on unemployment, if+ Read MoreThe post Do I have to go on payroll control for Chapter 13? appeared first on David M. Siegel.
If you’re in debt, it’s a good idea to try every solution to end your financial problems. Just don’t take too long.
Lots of us in the world of bankruptcy and debt relief tend to talk in the language of addiction when describing our clients.
Debt problems spiral out of control, making it impossible to stop using credit cards.
Using credit cards makes you feel good at first, but the buzz fades.
You’ve got to hit rock bottom before you can get out of debt.
Rock bottom, however, is a deceptive term because it implies that there’s nothing left. But as you’ll see, waiting that long to make a decision that may include bankruptcy isn’t your best bet.
Filing For Bankruptcy Takes Time
In order to get a bankruptcy case into the court system, you’re going to need to spend time getting together your financial documents.
You’ll also need to spend a fair amount of time working through the bankruptcy schedules and related documents, ensuring that the information is correct and accurate.
When I say it takes time, I’m not talking about 20 minutes on a lazy Sunday afternoon. In fact, most people spend upwards of 10-15 hours working with a bankruptcy lawyer before the case is filed.
For those going into the process without a lawyer, it’s even more time-consuming because there’s a steep learning curve when it comes to working through the forms and procedures.
If you’re broke, you’re likely chasing every dollar. You’re hustling just to make ends meet. Definitely not a good time to take a few hours to work on your bankruptcy case.
Filing For Bankruptcy Costs Money
There’s a filing fee to get your bankruptcy case filed, though some people may qualify to get their fees forgiven by the court.
Even if you’re going to file for bankruptcy without a lawyer, you probably want to spend some money ensuring that you’re qualified for the type of bankruptcy you’re seeking. No sense in wasting your time and energy, only to get your case thrown out.
If you decide to use a lawyer, there are fees involved as well.
If you’re at the end of your financial rope, you may not be able to pay for the help you need.
When You’re Broke, You’ve Got Fewer Options
Bankruptcy isn’t the solution to every financial problem.
If you’ve got an asset you can’t protect in bankruptcy, or a financial wrinkle that can’t be smoothed over with the help of the court system, then you’ve got to look for other options.
Those options involve spending money. Debt settlement, credit counseling, and other negotiation tactics call for you to spend something in order to make the creditors go away.
Without any money, you may no longer have a means to negotiate.
Planning Ahead Is The Wisest Choice
I’m not telling you to jump into the waiting arms of the bankruptcy court, but I do think it’s important to scope out your options at the beginning.
Get a feel for the pros and cons, as well as the costs, of all your debt relief options.
If you don’t, you may find that your best solution is out of reach.
At JCH Law Firm, we are able to represent both Debtors and creditors with the same capabilities and we can do so throughout the greater Los Angeles regions including Orange County and Riverside. Attorney Jeff Hsu has experience representing hard money lenders, and other secured and unsecured creditors involved in the bankruptcy process including Chapter 7 , 11, or 13.
In Chapter 7 cases, creditors must be vigilant to file 523 non-dischargeability actions or attend the 341 Meeting of Creditors. In chapter 11 and chapter 13 cases, creditors may have to file objection to plans or disclosure statements, and/or file non-dischargeability actions during the bankruptcy process.
Remember, timelines in bankruptcy are critical and oftentimes creditors only get one bite at the apple or otherwise lose their opportunity to protect their claims. Make sure this doesn’t happen to you. Whatever your need, give us a call at 626-999-5959.
Updated daily, this blog will keep you informed on the latest bankruptcy news! 
Learn more about how Bankruptcy works and what you need to know.