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The Other Foreclosure Crisis: Seniors Facing Foreclosure Due to Delinquent Property Taxes

Posted on in Foreclosure

A recent article published by the Association of American Retired Persons Bulletin (AARP) exposes a new crisis in our country. It appears that seniors are under siege due to delinquent property bills and haunted by credit collection agencies ready to either secure the debt or take control of the home through a tax lien foreclosure.

The article profiles Melvin Phillips, a security guard and retired Army captain thought he was current on his property tax obligation, but according to the article Elm Capital, LLC (Jericho, N.Y.), Phillips was facing foreclosure over a $8,000 tax lien levied against his home. He thought he would be able to establish a payment plan in court but Elm Capital was prepared to take his house by foreclosing on Philips and his property if he could not produce $15,000 immediately. Through assistance offered by the AARP Legal Counsel for the Elderly (LCE), Captain Phillips was able to reach an agreement with Elm Capital and save his home.

This appears to be a growing crisis, as supported by data compiled by the National Consumer Law Center, a nonprofit advocacy group. The center estimates U.S. property tax delinquencies may total $15 billion and it has labeled this foreclosure movement as “the other foreclosure crisis”.

Unfortunately for many tax lien foreclosures exposes older Americans to a challenging, frustrating and even frightening experience. The LCE reports that seniors often become delinquent because they are not receiving all the exemptions they are entitled to and are often at the mercy of the companies who purchased the tax lien, often being asked to pay more than the original tax delinquency.

AARP further reports that 30 states and the District of Columbia hold the legal authority to sell property tax liens to private debt collectors often with an increased interest rate of up to 50 percent. Unfortunately for Illinois citizens, the state is not exempt, although the LCE is pushing for a new law capping liens under $2,500 on primary residences as well as total legal fees and establishing an ombudsman to assist distressed homeowners.

For those residing in Illinois, it is highly suggested that you contact an experienced bankruptcy or foreclosure attorney to discuss your options. The following information may provide insight as to what may be discussed during the initial consultation.

  • Your attorney will assist with drafting a settlement proposal to the tax authority who has placed the lien against your property;
  • The proposal should reflect that you are open to reaching a reasonable settlement to satisfy the tax lien over a specified time period;
  • It is in the best interest of the tax authority to work with you and your attorney to reach a settlement to satisfy your debt because it would less expensive for the authority to pursue foreclosure;
  • Discuss and consider filing for bankruptcy. If the taxing authority has declined your settlement proposal by opting to declare bankruptcy you will gain protection against the tax lien foreclosure. The taxing authority can not enter a real estate foreclosure if a bankruptcy has already been filed by your bankruptcy attorney.
  • Your attorney will opt to list your home as exempt when preparing the bankruptcy petition basically because residential real estate is deemed exempt in this type of action. You will not be required to sell your residence to satisfy the tax lien. You will also have the ability to reaffirm your mortgage loan and remain in the home.
  • Your attorney may also suggest that you make arrangements during your bankruptcy to satisfy the tax lien. By doing so, foreclosure will be avoided and you will gain time to satisfy the debt.

For anyone, seniors or any age level, protecting your home from a tax lien foreclosure can be challenging. It is also a complex situation especially when it appears that the credit collection agencies purchasing the tax liens are undermining home ownership in not only Illinois but across the nation. That is why considering hiring an experienced attorney to represent your rights and interests is the first step to saving your home.

With over 40 years combined experience, Steve and Gary Newland have been instrumental in protecting the rights of Illinois citizens. Our legal team works to assist those who have been exploited or victimized. We will set the best recourse to ensure you or your senior family member receives a fair and equitable solution that provides relief to all involved. We will take the time to listen. Contact Newland & Newland, LLP to schedule an initial consultation today.

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