Illinois Property Tax law provides an interest rate of 18% for tax debts where the debtor does not intend to redeem the property, even where the debt is owned by a tax purchaser at the time of the debtor’s chapter 13 petition. In re Drake, No. 21-4903 (Bankr. N.D. Ill. Feb. 23, 2022).
The debtor failed to pay Illinois property taxes on her real property, and Integrity Investment Fund, LLC, purchased the tax debt (“Sold Taxes”). Over the next few years, the debtor failed to pay the property taxes, and Integrity, in accordance with its rights as the tax debt purchaser, paid the taxes (“Subsequent Taxes”) and added the amount to the debt. The debtor did not redeem the property by paying the delinquent tax debt as permitted by Illinois law. Instead, she filed for Chapter 13 bankruptcy and proposed a plan under which she would pay off the debt of $30,711 at a 0.5% interest rate. Integrity objected to confirmation of the plan, arguing, in part, that the appropriate interest rate was 18% for the tax debts. The debtor objected to Integrity’s claim. [Read more…] about Interest Rate on Tax Debts