Use The Real Tax Due Date For Means Test

Aerial view California suburb

Pacifica CA


Californians:  did you know property taxes were due earlier this week?

Huh? you say.  Property taxes are due in April and December.

Wrong.  Property taxes are due February 1st and November 1st.  They are delinquent if not paid by April 10th and December 10th.

Interesting, you say.  But what’s the implication for bankruptcy’s means test?

It means that in cases filed between now and the last date to timely pay property tax, the debtor has a present obligation for secured tax claim that must be paid to retain the property.  Those taxes can properly be set out on B-22 and deducted from CMI when calculating what the debtor can pay unsecured creditors.  This assumes of course that the taxes are paid by your client directly and are not included in the monthly mortgage payment.

This is just the property tax version of my post on when income taxes are due:  income taxes are owed on January 1;  there is simply no penalty for not paying them til after April 15th.

So, look at the calendar, ask the client about the property tax installment that must be paid by April 10th, and use the interval to your means test advantage.

Image courtesy of Wikimedia Commons and US Corp of Engineers

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  • http://www.bourguignonlaw.com George E. Bourguignon, Jr.

    Very astute point.  You are making your classes more attractive.