According to an article in the Star-Telegram, more and more homeowners are paying their property taxes by taking out a loan with a third-party lender. According to the article the number of homeowners who used third-party lenders to pay their property taxes went from 1,206 in 2007 to 1,839 in 2008, a 41 percent increase.
The fact that more homeowners are using loans to pay their property taxes is a sure sign that delinquencies are on the rise for 2009 according to tax officials, who predict that property tax delinquencies will increase by as much as 2 percent in 2009.
The article said:
“I wouldn’t have been surprised if the delinquencies had been up this year given how tough the economy is,” said Betsy Price, Tarrant County tax assessor/collector. “What we saw in the 1980s recession was a lag in delinquent accounts. The first year, people tend to pay. Then, the next year, if they’ve lost a job or things are getting tighter, it is harder for those property owners to get the payment together.”
We’ve already discussed previously on this blog how the loss of property taxes can devastate communities and severely degrade the standard of living because of the inability to pay for basic services such as police, fire departments, schools etc.
The fact that homeowners are struggling to pay their taxes is also a sign that they are financially strapped in general and any little emergency might send them over the financial edge causing foreclosure or even bankruptcy. But in some cases it may be better for homeowners to file for bankruptcy because taking out a loan to pay taxes at best is temporary fix and at worse a way to dig themselves deeper into the hole.
The article highlighted on such case:
A 60-year-old Arlington man who asked not to be identified has turned to a third-party lender for the past two years to pay his property taxes. The man, who retired early and is struggling to pay medical bills for his wife, could not scrape together the approximately $4,500 he owed in taxes this year.
“As much as I didn’t want to do this, it was the only way I could make my taxes,” he said. “It’s not the economy that’s hurting me; it’s that I’ve got a lot of medical bills that I’m struggling with.”
This man’s difficult situation doesn’t have to be like this. Many senior citizens are facing financial hard times because of medical debt, so he is not along. But the mistake many seniors make is that they attempt to borrow their way out of the hole. It just can’t be done.
This man would probably be a good candidate for bankruptcy which can probably wipe out the medical debt and save his home all while avoiding the additional debt he’s taking on just to pay property taxes. If you find yourself facing property taxes you can’t afford, it is a sign of a deeper financial problem; speak with a bankruptcy attorney to find out how bankruptcy can help dig you out of a financial hole.