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Can Bankruptcy Stop Property Tax Foreclosure in Texas?

If you have received a written notice that your property is “subject to foreclosure,” or “in foreclosure,” because of unpaid property taxes, you may be wondering if filing for bankruptcy could save your home from foreclosure in Texas. The short answer is yes. But it is important to note that this should be your last resort as filing for bankruptcy can have a negative impact on your credit score and finances. Keep reading to learn more about bankruptcy and other options that can stop the foreclosure process before you consider filing for bankruptcy.

What Does it Mean to File for Bankruptcy?

Bankruptcy is used to help people who can no longer pay their debts get a fresh start by liquidating assets to pay their debts or by creating a repayment plan. A bankruptcy case usually begins when the debtor files a petition with the bankruptcy court, and as soon as the petition is filed in court, an “automatic stay” will be put into effect. The stay is an order from the bankruptcy court that stops all collection proceedings and allows a property owner to examine their financial options, preventing creditors from repossessing your property.

Why Filing for Bankruptcy May Not Be a Good Idea

Although a bankruptcy filing will temporarily stop the property tax foreclosure process, it may not get rid of the property tax debt. You will still need to pay off your outstanding amounts. Additionally, the interest on your unpaid taxes will continue to accrue during the bankruptcy proceedings, whereas a property tax loan will stop these fees and interests from accruing.

It is also important to understand the long-term effects it can have on your finances and credit. By filing for bankruptcy, your credit score can drop by as much as 250 points and can stay on credit reports for up to 10 years, depending on the type of bankruptcy you choose. This will make it difficult to get approved by lenders in the future. That’s why you should consider bankruptcy as a last choice and look into other options before you get to that point.

3 Options for Stopping Property Tax Foreclosure Before You File for Bankruptcy

Option 1: Set up a Repayment plan with the county. It may be worthwhile contacting your local taxing entity to find out if a payment plan is an option. It is important to note that some law firms do not offer payment plans, while others do. In this case, usually, the taxpayer will have to come up with at least 25% of the amount due to get on a payment plan.

Option 2: Apply for a Tax Deferral if applicable. A property tax deferral is another option for those over 65 if the property is their homestead. A deferral allows a property owner to stop paying taxes until they are no longer living in their house. The property owner must apply and be approved by their local Tax Assessor’s office to get a deferment.

Option 3: Secure a property tax loan with a trusted lender. If you are looking for an option to pay off your outstanding property tax bill quickly, a property tax loan could be a great fit for your needs. By working with a trusted property tax lender, you could avoid further costs associated with tax delinquency and even stop foreclosure. How does it work? The lender will first pay off your delinquent tax bill immediately, then you will work with your lender to set up a re-payment plan. Many property tax loans feature flexible terms and affordable monthly payments. By taking advantage of a property tax loan, you can breathe again knowing that your home is safe from foreclosure.

At Johnson & Starr, we have helped hundreds of Texans save their homes with our fair, flexible, and easy-to-understand property tax loans. Our loan application process is straightforward and can often be completed in one day. Getting a property tax loan with us means:

  • No application fees.
  • No credit checks.
  • No home inspections.
  • No missed time from work–we come to you for the closing.
  • No money due at closing.

Don’t lose your home over delinquent property taxes. Our team is backed by professionals who have years of experience working with Texas tax property loans. Find out how we can help save your home – give us a call today at 888-508-3894.