Pay past due property taxes or attorney first?

[shoopy]

Before filing, I need to pay off 2 overdraft loans that are in my both my wife's and my names so she won't be included in the BK (both are well under $600, so no preferential treatment should be involved), approx $1,500 in past due property taxes, and approx 1,500 attorney fees. My guess is that it will take till the end of August to get the cash together for this, the last thing I was going to do was pay the attorney off in August and the past due taxes in July. Atty will take a $200 deposit to keep creditors at bay til I file,

You are probably wondering why I am even considering paying off the past due taxes before filing. Reason being, I don't want the bank to add an escrow account to my mortgage. I currently pay $650 per month, and the thought of additional $300 to catch up last years taxes, and make current payments seems overwhelming even after discharge. Plus, if I don't reaffirm the mortgage, the bank probably won't talk to me if there is a question about the escrow account.

Thoughts?

[Drazil65]

Hi, if you are not planning to reaffirm (smart) the mortgage are you just planning to stay and pay or move at some point? We do not have escrow attached to our mortgage and pay our own taxes as well. We paid the mortgage after filing until my husband got a full time job in another city and we will move this summer. We stopped paying the mortgage to save for the move and in addition did not pay the taxes due in April. The mortgage bank receives copies of the tax bill and the past due notices as well so they knew the taxes were not paid. They paid them this month (3 months past due) as I knew they would and have not said anything about escrowing. Because we are moving I knew we did not want to pay that big chunk of cash for taxes and that the bank would protect their collateral. They are asking us to modify so maybe if we were going to do that they would add in the taxes.

[HHM]

I assume the intent to is to "keep" the house...?

If you are already "past due" on the property tax, it may already be too late to prevent the bank from escorwing. Once the bank gets notice, that taxes are past due, that may trigger automatic escrowing and the bank is very unlikely to turn it off once it starts.

Note, just because it it property tax, doesn't mean it is not a preference. If the taxes are past due, it is a debt. So at a minimum, you will need to wait 90 days before filing. But as mentioned above, you might end up paying property tax, and the bank may initiate escrow anyway.

[shoopy]

I assume the intent to is to "keep" the house...?

If you are already "past due" on the property tax, it may already be too late to prevent the bank from escorwing. Once the bank gets notice, that taxes are past due, that will triggering automatic escrowing and the bank is very unlikely to turn it off once it starts.

Note, just because it it property tax, doesn't mean it is not a preference. If the taxes are past due, it is a debt. So at a minimum, you will need to wait 90 days before filing. But as mentioned above, you might end up paying property tax, and the bank may initiate escrow anyway.

Yes, keep the house for sure.

The bank has sent notice in previous years to initiate escrow, when taxes were late, and "turned it off" after being promised that it would be paid. Which it was.

But, your comments bring a greater question. I specifically asked the attorney that I found least objectionable about this being a preferential payment, and he replied to the effect of "I don't see why, the taxes will have to be paid anyway". Man, I am having real trust issues with all of the attorneys that I've interviewed. Back to the Yellow page, I guess.

Thank you for your input.

[shoopy]

For practical purposes, is an extra month going to make an difference in the overall scope of things? I was planning on filing at the end of August, if I do pay the escrow, that would drag it out to the end of September, I guess.

[shoopy]

...Note, just because it it property tax, doesn't mean it is not a preference. If the taxes are past due, it is a debt...

I have read many of your posts, while lurking, and have found them to be well thought out and informative. So, please don't take this the wrong way. I e-mailed the attorney that told me that paying the tax would be OK, in less that 30 minutes I got a reply back (I don't know it such a quick reply is a good thing or a bad thing ), his position is that a tax debt is not an unsecured debt, ergo payment is not preferential.

Obviously, I'm not a legal type, and am now in a bit of a quandary now. I don't want to keep bothering this guy, asking the same question. I have interviewed all the attorneys in this area that I would consider hiring, and in order to get another opinion, I would literally have to go to the next close by town 45 miles away.

I have Googled the heck out of this question, but apparently, I'm not phrasing it correctly, as there seems to be a lack of info on the subject.

Can you point me to a definitive cite, regarding this, so that I know for certain that I need a different attorney?

[LadyInTheRed]

I think the attorney is correct that a payment of property tax that is a secured debt is not a voidable preference. Here's one article that agrees that the payment of property taxes is not a preference: http://www.publicans.com/documents/A...h%20Weller.pdf See the last section in the article.

Here's the law on preferences that is cited in the article: http://www.law.cornell.edu/uscode/text/11/547

[shoopy]

...Here's the law on preferences that is cited in the article: http://www.law.cornell.edu/uscode/text/11/547

Thank you for the cites.