When Oregon property taxes go unpaid, counties can move to foreclose. That process can advance faster than many property owners expect. Chapter 13 bankruptcy may offer a way to stop that foreclosure and repay what is owed on a court-approved schedule while keeping the property.
How Chapter 13 treats property tax debt
Chapter 13 lets debtors repay overdue taxes through a repayment plan that usually lasts three to five years. Federal law gives priority status to taxes that became due within one year before the bankruptcy filing. The repayment plan must pay these priority taxes in full. Older property tax debt may qualify as general unsecured debt, which may not require full payment.
Under ORS Chapter 312, an Oregon county may start foreclosure after property taxes remain unpaid for the period set by state law. Property owners generally can pay the delinquent taxes and stop the foreclosure before the court enters a judgment. Filing for Chapter 13 also creates an automatic stay under 11 U.S.C. § 362. This stay generally stops collection efforts and foreclosure actions during the bankruptcy case. However, repeat filers may face restrictions on how long or to what extent the stay applies.
What does a Chapter 13 plan cover?
A Chapter 13 plan can address several types of debt:
- Priority debts, including recently delinquent property taxes, must be paid in full.
- General unsecured debts, such as medical bills and credit card balances, may receive partial payment based on the debtor’s disposable income and the plan’s terms.
- Secured debts, such as a primary mortgage, generally continue under their original terms. Debtors may repay past-due mortgage payments over the plan period.
Monthly plan payments depend on the debtor’s income, allowed expenses and amounts owed to priority creditors. The plan must also satisfy federal requirements for what unsecured creditors must receive.
When Chapter 13 may be the right option
For Oregon homeowners facing property tax delinquency, Chapter 13 may provide a path to keep their property while repaying what they owe. The decision to file depends on the debtor’s total debt, income and how far the county’s foreclosure process has advanced. An attorney familiar with Oregon bankruptcy law can review the specific circumstances and help determine whether Chapter 13 is appropriate.
