Property Tax Forfeiture and Foreclosure Timelines for Michigan - Time is Running Out!
The economic hardships of recent years combined with the burst of the "housing bubble" caused many Michigan families to get behind on their mortgage and/or property taxes. Although things may be improving now for some families and individuals, many homeowners are still trying to dig out the financial mess. This includes dealing with past due property taxes that may have them facing a foreclosure this month. Call us today at 866-261-8282 for a free consultation. We offer same day legal protection and can discuss your options to stop your tax foreclosure sale and save your home before it is too late. Time is of the essence, as judgments of foreclosure will be entered this month (between 3/1 - 3/30) and once the judgment of foreclosure is entered your only right will be to redeem the property by paying the amount of the property taxes for the tax year subject to foreclosure.
Property Tax Foreclosure Laws and Timelines
Property tax foreclosures are typically a longer process than a mortgage foreclosure. The formula for Michigan property tax foreclosure law is:
- Take the tax year that is owed + 3 years (i.e. this spring of 2015 they are foreclosing on 2012 property taxes);
- Sometime between January 31 and March 30, the Circuit Court will hold a hearing and a judgment of foreclosure will be entered by the County. Once the judgment of foreclosure is entered, your rights are limited to redeeming, or paying in full, the tax year at issue.
- March 31 of that year is the last day for a debtor to "redeem" (i.e., pay in full) the property by paying subject year's property taxes.
- Don't confuse this with the "forfeiture" of the property which happens in tax year + 2. The "forfeiture" process that happened previously doesn't actually culminate in losing the property, but is merely the 1st step toward foreclosure.
- It is sometimes tough to tell if/when that judgment is entered, as the FGU can enter any time after the show cause hearing (can happen as early as 1/30) up until 3/30. Certain counties, i.e. Wayne County, wait until very close to 3/30 before entering their judgments.
- In the event the property is not redeemed by paying the judgment amount in full and no other action is taken to protect the property, the property transfers to the County as of April 1 and they have full title and ownership rights. Many homeowners do not realize they lost the property because the County will not take action to evict the former property owner. The eviction process will be left to the party who purchases the property at auction in September - October (see below).
- July of the tax year +3 (3 months after expiration of the redemption period), the local government (i.e., city or township) and the State have a right of first refusal to purchase the property by paying off the past due property taxes.
- September - October of the tax year +3, the home is auctioned off to a 3rd party purchaser.
- Following the purchase of the property, the 3rd party will take action to remove the former homeowner from the property.
Don't Lose Your Home to Past Due Property Taxes
If you are facing a tax foreclosure or tax forfeiture, the time to act is now! You only have until the end of this month to preserve your rights by filing a Chapter 13 bankruptcy. When filed before the judgment of foreclosure, this reorganization plan will stop the judgment of foreclosure from taking effect and give you an opportunity to pay the subject year's taxes over a reasonable period of time, from 36 to 60 months. If a judgement is entered, a Chapter 13 reorganization plan can only be used to extend the redemption period by 60 days from the date the case is filed. If you already had a judgment filed against you by the FGU this month, still call us. In most instances, we are still able to negotiate with the FGU to treat the tax debt under a Chapter 13 bankruptcy plan if we file the case before the end of March. Beginning April 1st, property is owned by the FGU and they take the title. They allow homeowners to remain in the property because the FGU doesn't hold their annual auctions until September. Although you are living in the home, you no longer own the home. In recent years, the FGUs have proven non-negotiable in allowing the previous homeowners to make a settlement to set aside the judgment and stop the sale in September. Once redemption has expired (after 3/31), the FGU owns the property. The same as a mortgage owns a property after the foreclosure sale + 6 months. Unlike a mortgage company, the FGU takes no action to evict but instead auctions in the fall and lets the 3rdparty purchaser handle the eviction.
Other Benefits of Filing Chapter 13 Bankruptcy in Michigan
In addition to stopping a tax foreclosure sale, Chapter 13 bankruptcy is a strong financial tool to resolve other debts. Under a Chapter 13 plan we can:
- Defer all unsecured debts at 0% interest while you catch up on secured debts. You can reduce and often times eliminate the majority of these unsecured debts based on your budget:
- Credit cards;
- Medical bills;
- Personal loans;
- Second mortgage or home equity loan;
- Loan deficiency debt (i.e. vehicle repossession);
- Past due utilities; etc.
- Stop creditor actions, such as:
- Vehicle repossession;
- Mortgage foreclosure;
- Wage garnishment, etc.
- Reduce secured debts, such as:
- Attempted loan modification;
- Lower a vehicle payment by reducing the interest rate, extending the payment terms or even possibly decreasing the principal amount owed depending on length of ownership;
- Remove a second mortgage or home equity loan;
- Reduce ("Cram down") the amount owed on a rental property, etc.
- Improve your credit by:
- Resolving debt and therefore reducing your debt-to-income ratio. This factor accounts for 30% of your credit score according to FICO;
- Restore a positive payment history through the Chapter 13 plan and eliminate late reports to the credit agencies. This has the single largest impact on your credit, accounting for 35% of your credit score.
Call Acclaim Legal Services Today
In summary, time is running out to stop a tax foreclosure sale this year. From a technical perspective, a Chapter 13 bankruptcy needs to be filed before the judgment of foreclosure is entered this month (i.e., 2012 delinquent property taxes). We can help you determine where you are in this process. If we find a judgment has already been entered, we can negotiate with the FGU up until March 30 to use the Chapter 13 plan to redeem your home. Take steps to protect your home, reduce your debt and improve your credit! Call today for a free consultation with a licensed Michigan bankruptcy attorney or schedule a time online.