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Tax Bill Turns into Tax Lien Nightmare for Plumber and Wife

In a previous post we alerted our Texas readers to the common practice of tax liens being bought and sold, sometimes with disastrous results. For one family, a plumber and his wife, a small tax bill has turned into a monumental problem.

The problem began four years ago when a tax bill for $140 was not paid. The couple overlooked the bill for an unremembered reason. Follow up notices were apparently not sent and a tax lien was placed on their home. Fast forward four years and the couple is facing foreclosure. How could that happen?

The plumber and his wife fell victim to municipality budget shortfalls. The economy slowdown has caused belt tightening in a number of areas, and local government is no exception. Faced with budget shortfalls, the municipality could sell tax liens to a third party which can attempt to collect the back taxes. According to the National Consumer Law Center local governments collected $15 billion in 2010 by selling off home tax liens.

The new owner of the tax lien isn't interested in seeing homeowners stay in their homes. The new owner is interested in repayment, with penalties and interest.

The plumber and his wife's tax lien was sold to Approved Realty Group. The company sent the couple a bill for $37,500 for their $140 missed tax payment. The couple fought the charge but ended up saving their home by adding $50,000 onto their existing mortgage and paying the new debt over time.

If there is a moral to this story it is that any tax debt resulting in a tax lien should be taken very seriously. The consequences could be severe.

Source: Daily Mail, "Man threatened with foreclosure after overlooked $140 tax bill spiraled into $50,000 interest charge on his home," July 24, 2012

At our Dallas law firm we represent individuals and businesses solve their problem with back taxes and tax liens such as the issue described in this posting.

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