Don’t Lose Your Home in a Tax Sale

Unpaid property tax debt can cause a huge problem for homeowners. In our firm’s hometown of Memphis, TN, it’s one of the top reasons people lose their houses. Fortunately, you can stop foreclosure over tax debt and get out of debt for good.

We’ve spent the last four decades helping families keep their homes, even and especially with unpaid property taxes. We know our way around this common problem, and we understand what it takes to fix it.

So don’t let tax debt destabilize you, uproot your family, and cost you your assets. With some simple steps, you can find financial freedom and protect your home from a tax sale.

file bankruptcy in TNMemphis’ Property Tax Debt Problem

When you have unpaid property taxes, or when you inherit them, and you don’t show any effort to pay them back over time, the city or county can foreclose on your home. They then have the option to sell the property through something called a “tax sale.” Generally, homebuyers and investors looking for a bargain might purchase the property through one of these sales. It’s a popular way for companies to find good real estate deals.

In Memphis and Shelby County, it’s easy to assume investors are sweeping up foreclosed properties. After all, across the nation, massive companies like Redfin have been buying homes at the lowest cost and flipping them to make a high profit. 

But in fact, Shelby County actually owns more properties from tax sales than investors do.

The main reason is that people who can’t pay their property taxes often also struggle to pay for maintenance and upkeep. And that means many of these homes are in disrepair and not as attractive to investors.

As a result, the city and county take them back from their owners and then can’t resell them. According to Action News 5, the Institute for Public Service Reporting found that “of more than 8,000 properties sold in tax sales between 2016 and 2022, Shelby County came to own more than 5,500 of them – nearly 70%.”

So while thousands of people in Memphis are losing their homes over unpaid property taxes, the city isn’t even making its money back by reclaiming the homes. It’s a lose-lose situation: the taxes don’t get paid, the government sits on unused assets, and the family is left homeless or forced to move against their will.

County and City Governments Aren’t Looking Out for You

There’s a solution to this problem that might help everyone. Local governments could work out a way for homeowners to pay down some of the debt over a long period of time – basically an affordable payment plan that shows some effort on the part of the owner.

But people who’ve tried this often find it doesn’t work at all.

Unfortunately, payment plans and deals with the city or county aren’t legally binding. So even if you make your payments, it doesn’t guarantee they’ll forgive your debts as promised. A new administration or case manager could change the rules on you, and suddenly you face foreclosure all over again.

However, with property tax debt, you do have a right of redemption. This means if your house is being foreclosed or sold off over unpaid tax debt, you can still recover it by paying back the debt or including it in a bankruptcy. This gives homeowners a method to stop foreclosure over tax debt that’s more forgiving than with other types of debt.

Inheritance and Property Tax Debt

The problem of property tax debt comes up often for people who inherit a home.

We see this in our office every day: a person inherits their deceased parent’s home. Then they discover their parent was five years behind on their property taxes. The debt has ballooned into thousands of dollars, and the city wants their money.

The new owner doesn’t have this money. Their loved one’s death and owning this house in the first place caught them by surprise, let alone budgeting for a massive payment to the city. They just spent anything extra they had on a funeral. Now they could lose this asset – and all the memories it may hold for them – because of a surprise debt.

Shelby County and the City of Memphis don’t pay attention to these deeply personal details. They only look at the debt, which you now have inherited from your family, like it or not. And if you can’t pay it back, they will eventually look to foreclose.

How to Stop Foreclosure Over Tax Debt

If you’re in debt over unpaid property taxes, you need an official, enforceable way out that will solve the problem for good.

Bankruptcy is a court-approved, legally-binding option to help you keep your home and get out of debt. Through Chapter 13, you can stop foreclosure, clear your unpaid property tax debt, protect other assets, and get a fresh start.

Chapter 13 allows you to set up an affordable payment plan based entirely off your personal financial situation. Because your attorney and the courts put it together with you in mind, the monthly payments are actually doable.

And once you finish your plan, your debts are cleared and you get your life back.

Our attorneys have helped thousands of people in Memphis and Shelby County get out of debt this way, including keeping families in their homes after unpaid property taxes threatened everything.

You can stop foreclosure over tax debt today, and the conversation to get started is totally free. Just call us at 901-327-2100 or contact us online to speak with an attorney, no strings attached.