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What Happens To Real Estate Taxes In A New Jersey Chapter 7 Bankruptcy?

A chapter 7 will not allow a debtor to save their house, if they are behind with real estate taxes or mortgage payments. In a New Jersey chapter 7 bankruptcy case, real estate taxes must be paid if the debtor wishes to keep the house.

If real estate taxes are due to a township and/or a tax certificate owner, a chapter 7 will not save their house from a tax foreclosure action. Also, if a debtor is behind with mortgage payments, that includes escrow for real estate taxes, a chapter 7 bankruptcy filing, will not save their house from a mortgage foreclosure action.

However, in a New Jersey chapter 7, typically the debtor will not be personally liable for any real estate taxes, that are due prior to and/or after the filing. However, this does not mean that the debtor does not need to pay and keep the real estate taxes current, if they wish to keep the house. This means that the taxing authority, tax sale certificate holder, or mortgage company will not pursue the debtor for the money that is due, but can take the house through foreclosure, if the taxes are in default.

The bankruptcy laws do not permit the taking of the debtor’s real estate. If the debtor is behind with real estate taxes, the debtor is able to continue to reside in the house, until the mortgage company or tax sale certificate holder takes the house by foreclosure. The explanation of a tax sale and a tax sale certificate holder is set forth in a separate blog.

Robert Manchel, who is a bankruptcy lawyer in NJ., will answer questions regarding real estate taxes and how bankruptcy can help someone who is behind with real estate taxes at (866) 503-5655.

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