by Divided Court Holds Tax Purchaser Has a “Tax Claim” Under § 511(a); Judge Hamilton Warns Decision Gives Private Investor a Windfall and Makes Chapter 13 Relief More Difficult
In In re Romero, No. 25-2021 (7th Cir. July 16, 2026), the Seventh Circuit affirmed a bankruptcy court ruling that an Illinois tax purchaser holds a “tax claim” under 11 U.S.C. § 511(a) and is entitled to an 18% annual interest rate when its claim is paid through a Chapter 13 plan.
NCBRC and Legal Aid Chicago filed an amicus brief supporting debtor Bernardo Romero and urging application of the substantially lower Till “prime-plus” rate.
Background
Romero owned a home in Chicago and had delinquent property taxes. Corona Investments purchased the taxes at an Illinois tax sale and obtained a Certificate of Purchase. Shortly before the redemption period expired, Romero filed Chapter 13, preventing Corona from obtaining a tax deed and leaving Corona with a secured claim of approximately $26,000.
The dispute was over the interest rate Romero had to pay on that claim through his Chapter 13 plan.
The Seventh Circuit’s Decision
The majority first held that Corona’s claim was a “tax claim” under § 511(a), even though Corona was a private investor rather than a taxing authority. Relying heavily on In re LaMont, 740 F.3d 397 (7th Cir. 2014), the court reasoned that the tax purchaser effectively acquires the county’s right to receive payment of delinquent property taxes and “stands in the shoes of the county.”
Because § 511(a) requires interest on tax claims to be determined by “applicable nonbankruptcy law,” the court rejected Romero’s argument that the Till v. SCS Credit Corp., 541 U.S. 465 (2004), prime-plus method should apply. The court concluded that the most analogous Illinois law was 35 ILCS 200/21-15, which imposed an 18% annual rate on delinquent Cook County property taxes for the years at issue.
Accordingly, the court affirmed the 18% rate.
Judge Hamilton’s Dissent
Judge Hamilton strongly dissented. He concluded that a private tax purchaser does not hold a “tax claim” because the county’s tax lien is extinguished at the tax sale rather than transferred to the purchaser. Payments to the purchaser benefit a private investor, not the taxing authority or the public.
Even if § 511 applied, Judge Hamilton argued that the 18% rate could not be the applicable nonbankruptcy rate because a tax purchaser is never entitled to receive that rate under Illinois law. He would instead have applied the Till methodology.
Judge Hamilton warned that the majority’s rule gives an oversecured tax purchaser a windfall and makes Chapter 13 relief more difficult for homeowners trying to save their homes.
Status
On July 30, 2026, the Appellant filed a Petition for Rehearing En Banc. This is still pending before the court.
NCBRC thanks David Yen for authoring the amicus brief on behalf of NCBRC and Legal Aid Chicago.