Thursday, July 19, 2012

Property Taxes in Bankruptcy

      I wrote a post a few months ago on Property taxes is bankruptcy because we argued the case and the decision had yet to come down. Well, a couple of weeks after that post was written we the judge issued his opinion and the decision was split, partially granted and partially denied. 

      First, we won on the issue that "penalities" are not "fees, costs, or charges" that could be allowed for the secured creditor.  Therefore, a debtor's delinquent property taxes would be charged a 12% interest rate and not an 18% interest rate; moreover, the secured claim would only grow at 12% and not 18%.  One part of the decision the judge added in, and it was not argued by us nor the Metro Trustee's office, but was argued in the Chapter 13 Trustee's brief.  That issue was the fact that since, in this case, the debtor was solvent the Metro Trustee's office should be allowed an unsecured claim of the 6% penalty, but only from the date of filing to the date of the confirmation order.