Property Tax Foreclosure – Can it be Stopped?

The short answer is yes, but timing is everything!  A property tax foreclosure occurs when a homeowner becomes delinquent on property taxes that are over three years past due. 

Process for Property Tax Foreclosure in Michigan:

Parcels are forfeited to the local county treasurers when property taxes are delinquent for two years.  When the property taxes remain unpaid as of March 31^st of the third year of delinquency, the home is foreclosed on by the “Foreclosing Governmental Unit” or FGU.  This agency is responsible for custody and sale of the home after a tax foreclosure.

The State of Michigan has especially strict rules for the collection of delinquent property taxes and ultimately shifts the responsibility for collecting delinquent taxes to the County Treasurer’s office.   Here is a quick overview:

• Year 1:   Property taxes are paid directly to the local city, village or township.  If the taxes are not paid and become delinquent, the collection is turned over to the Office of the County Treasurer and a 4% fee is added with a 1% per month interest rate (12% per year) in March of that year.
• Year 2:  In this next year, the interest rate increases to 1.5% retroactively (or 18% per year).
• Year 3:  The third and final year of the tax forfeiture and foreclosure process, homeowners that do not pay the delinquent property taxes will lose the rights to their property and it is offered at auction to recover the taxes, interest and penalties that are owed.

Ways to Stop a Property Tax Foreclosure:

Oakland County has been recently quoted as saying, "There are so many things that are available to people," said Laura Schmitt, chief tax administrator. "They just have to contact us. We can guarantee a one on one counseling and let you know what resources and what options there are."

Property tax foreclosure is preventable.  Here are several options to protect your home if you have fallen behind on property taxes.

• Pay the third years delinquent taxes in full (tax year 2015) by March 31, 2018.
• File Chapter 13 bankruptcy prior to 3/31 of the third year or sooner.  A Chapter 13 Reorganization Plan can help you set up reasonable repayment terms and allow you to consolidate and defer other debts while you concentrate on bringing the property taxes current.  This court-authorized, debt consolidation plan offers many other benefits if you are struggling with debt.  A Chapter 13 plan will allow forbearance or elimination of general unsecured debt to allow you to focus on priority debts such as a home, automobile, income taxes and property taxes.  Call our office today to receive a free consultation on your filing options.
• If you meet the criteria, you may be eligible for a poverty tax exemption or a hardship exemption allowing you additional time to get caught up on the back taxes without losing your property.  You must have the exemption approved prior to the property tax forfeiture deadline.  If you have filed a Chapter 13 Reorganization Plan (and have stopped the property tax forfeiture), you may still work with the County to obtain property tax exemptions going forward.  Contact your local country treasurer to discuss the criteria.

If you are behind on your property taxes, time is of the essence.  Please call our office today at 866-261-8282 for a free consultation on how you can stop your property tax foreclosure today! 

Delinquent Property Tax Timeline (per Oakland County website)