J Thomas Black
Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization

 I had a client recently, she was in Chapter 13 and paying her past-due property taxes through her Chapter 13 plan. That is why she filed, the property tax (or "ad valorem" tax) authorities had threatened to seize her house. That is very serious. This lady didn't have a mortgage, but even if you have a mortgage, the property tax authorities can foreclose on the mortgage company too!

At least here in Texas, and probably in all states, ad valorem taxes are first priority, ahead of mortgages, homestead claims, and everything else. So we had her in a Chapter 13, which can allow you to pay past-due property taxes over a long period of time, up to 60 months, and it can also help you save your car or truck, and pay part or all of your other debts, depending upon your income and other circumstances.

Anyhow, this lady was continuing to not pay taxes, even while in bankruptcy. That is a no-no, and can result in the bankruptcy being dismissed and her losing the house. So her brother talks her into putting her house into a "land trust" scheme that he found on the internet.

Folks, don't believe everything you hear on the internet! Once she did that, the tax authorities were not prevented from seizing her house for the back taxes, as she had signed the house over to the Land Trust! They immediately sued the Land Trust for the taxes, and to sell the house for taxes.

Well, long story short, we got the house back in her name, and protected by the bankruptcy again, so she is safe now. We will likely try to modify her plan to add the delinquent taxes, so she can pay them through her plan. Hopefully she will get to keep her house. But it will have cost her additional attorney fees, interest and penalties that she could have avoided. Please, don't try to be your own lawyer, or do things behind your lawyer's back! And don't believe everything you find on the internet. This Land Trust scheme almost cost my client her house.

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