Can Homeowners Recover Their Homes Lost at Tax Sales?
In three different bankruptcy cases filed in Philadelphia in the United States Bankruptcy Court for the Eastern District of Pennsylvania, the Bankruptcy Court has allowed the homeowner the ability to recover their home if it was lost at a tax sale. The prevailing Pennsylvania law has permitted a homeowner of a property located in the City of Philadelphia who resides in the property to redeem the property within nine months of the date of the sale by paying off the purchase price, plus 10% plus other expenses. What the bankruptcy court has done is extended the period allowed for the redemption to a period of five years.
In the case of In Re Terry, The Honorable Magdeline D. Coleman permitted a debtor to redeem a home lost at a real estate tax sale in Philadelphia by filing a bankruptcy within nine months of the date of the sale. Thereafter The Honorable Ashely M. Chan and The Honorable Eric L. Frank, Chief Judge also permitted the homeowners to recover their property by filing a Chapter 13 Bankruptcy case within nine months of the date of the Tax Sale in Philadelphia. The debtor is permitted to propose a Chapter 13 plan which will redeem the property by paying off the purchase price plus 10% and other expenses within a period of five years.
The wonderful advantage of these decisions of the Bankruptcy Court is to allow someone who does not have the funds to redeem the property within nine months to now get up to five years by using the Chapter 13 filing to redeem the property. The purpose of these decisions is to protect the homeowners from the loss of their property. These cases are another great example of the Bankruptcy Code being used to interpret State law to help people.
There are a number of ways to stop real estate foreclosure sale:
- You can pay the taxes in full and up to date.
- You can arrange a repayment plan with the taxing authority which allows you to repay the taxes over an extended period of time.
- You can file a Chapter 13 Bankruptcy case.
Chapter 13 bankruptcy protects your home and gives you an extended period of time, between 3 and 5 years, to get caught up on the real estate taxes.
We had a client come in three days before the scheduled Sheriff’s Sale of his home. We informed him that filing Chapter 13 would stop the sale, give him up to five years to pay the arrears, and also help him with his credit card debt and personal loans. Because he had a lot of equity in his home, we were not able to get his unsecured debt completely wiped out, but he paid those creditors in part over five years and the unpaid remainder was discharged! He had no idea of what a Chapter 13 Bankruptcy filing could actually accomplish for him and how it could improve his life and put him in a much better financial position.
If a property has been sold at a real estate tax sale in Philadelphia and the property has not yet been redeemed, you should quickly call Philadelphia foreclosure attorney David M. Offen at (215) 625-9600 to go over your options during your free consultation.
