You can discharge property taxes in Chapter 7 bankruptcy only if the tax was last payable without penalty more than one year before you filed, and even then the discharge wipes out your personal liability without touching the lien on your property. The taxing authority loses the right to sue you or garnish your wages, but it keeps the right to foreclose. For most homeowners with delinquent property taxes, that surviving lien is the real problem.
The One-Year Test
The Bankruptcy Code treats recent property taxes as priority debts that cannot be discharged. A property tax qualifies for discharge only if it was last payable without penalty more than one year before your bankruptcy petition.1Office of the Law Revision Counsel. 11 USC 507 – Priorities Anything inside that one-year window is a priority claim and rides through bankruptcy untouched.
The date that matters is when the tax was last payable without penalty, not when the bill arrived or when you first missed a payment. Some jurisdictions allow partial payments or extend deadlines, so you have to check your local tax authority’s rules to pin down the exact date. A few weeks on either side of the cutoff can decide whether the debt is gone or still fully owed.
A quick example: if your county tax was due January 31, 2025 and you file on March 1, 2026, roughly thirteen months have passed and the tax clears the hurdle. File on November 1, 2025 instead and you are inside the window; the debt survives.
Tolling Events That Stretch the Window
The one-year period is not always a straight calendar count. Certain events suspend the clock, so the lookback can run longer than twelve months.1Office of the Law Revision Counsel. 11 USC 507 – Priorities Two situations come up most often.
A prior bankruptcy filing extends the window. If you had an earlier case with an automatic stay in effect, the full length of that stay plus another 90 days gets added to the lookback. Someone who filed Chapter 7, had it dismissed, and refiled may discover that taxes they thought were old enough are still priority debt.
A collection hearing or appeal does the same thing. If you requested a hearing or appealed a collection action and nonbankruptcy law blocked collection during that time, that period plus 90 days gets tacked on as well.
The math is not obvious. A property tax last payable fourteen months before you file can still be non-dischargeable if a prior bankruptcy was open for three months in the interim.
Fraud or Evasion Eliminates Dischargeability
A property tax that would otherwise qualify becomes permanently non-dischargeable if you filed a fraudulent return or willfully tried to evade the tax.2Office of the Law Revision Counsel. 11 USC 523 – Exceptions to Discharge There is no time limit on this exception. A tax from a decade ago can survive bankruptcy if the taxing authority proves you deliberately underreported values or hid assets to lower your assessment.
The standard is intentional wrongdoing, not an honest mistake. A clerical error on a property declaration or a good-faith disagreement about assessed value will not trigger the exception. If the court agrees fraud or evasion occurred, the debt follows you out of bankruptcy no matter how old.
The Lien Survives the Discharge
This is where expectations usually collide with reality. Discharging a property tax in Chapter 7 ends your personal liability. The government cannot sue you, garnish your wages, or levy your bank accounts for that debt. The tax lien attached to your property stays in place.3Office of the Law Revision Counsel. 11 USC 727 – Discharge
A property tax lien is a statutory lien, created automatically by law when the tax goes unpaid. Unlike a judicial lien from a lawsuit judgment, it cannot be removed with the lien avoidance tools in the Bankruptcy Code. The Code provides that exempt property remains liable for properly filed tax liens.4Office of the Law Revision Counsel. 11 USC 522 – Exemptions
The practical results are straightforward. To keep the property, you have to pay off the lien. If you sell, the lien is satisfied from the proceeds before you see any money. If you do nothing, the taxing authority can foreclose. The discharge protects you personally and does nothing to clear the title.
When Discharging Personal Liability Still Helps
If the property has little or no equity, or you plan to walk away, discharging the personal obligation is real relief. Without the discharge, the taxing authority can pursue you for any deficiency after selling the property. With it, the government is limited to whatever the property brings at sale. For someone already underwater on a home, that distinction can be worth thousands of dollars.
Penalties and Interest
Late penalties have their own rule. A tax penalty is non-dischargeable if it relates to a non-dischargeable tax and the underlying event occurred within three years before filing.5Office of the Law Revision Counsel. 11 USC 523 – Exceptions to Discharge Penalties on recent property taxes survive with the tax. Penalties on older taxes that qualify for discharge usually go with them.
Pre-petition interest generally follows the fate of the underlying tax. If the tax is discharged, interest on your personal liability typically is too. Interest secured by the lien is different. The lien amount does not shrink because your personal obligation ended, and depending on your jurisdiction, interest may keep accruing against the property after discharge.
If the Tax Does Not Qualify
A property tax that fails the one-year test, falls under the fraud exception, or gets caught by tolling is a priority debt. Priority debts survive a Chapter 7 discharge.2Office of the Law Revision Counsel. 11 USC 523 – Exceptions to Discharge
During the case, the automatic stay temporarily blocks collection. The stay ends when the case closes, is dismissed, or your discharge is entered.6Office of the Law Revision Counsel. 11 USC 362 – Automatic Stay Once it lifts, the taxing authority picks up where it left off and can pursue garnishment, levies, and foreclosure for the full amount owed.
Filing Chapter 7 against a non-dischargeable property tax buys a pause, not a solution. You come out owing the same amount with the taxing authority’s full collection powers restored.
When Chapter 13 Is the Better Tool
Chapter 13 does not discharge priority property tax debt either, but it offers something Chapter 7 cannot: a structured repayment plan with the automatic stay protecting you from foreclosure while you catch up. The plan has to pay priority claims in full, which includes any property taxes that fail the one-year test.7Office of the Law Revision Counsel. 11 USC 1322 – Contents of Plan
Plans run three to five years depending on where your household income falls against your state’s median. Below median gets a three-year plan; above median requires five.7Office of the Law Revision Counsel. 11 USC 1322 – Contents of Plan Spreading a large tax debt over that period makes monthly payments far more manageable than a lump-sum demand from the county.
Chapter 13 also stops the bleeding on interest in many cases. New interest on tax debt is generally put on hold once you file, which keeps the balance from growing while you make plan payments. If you have substantial delinquent property taxes and a home worth saving, pay the full tax on terms you can afford, with foreclosure off the table as long as you stay current.