In re Romious

487 B.R. 883, 2013 WL 221432, 2013 Bankr. LEXIS 262
CourtUnited States Bankruptcy Court, N.D. Illinois
DecidedJanuary 18, 2013
DocketNos. 12 B 26203, 12 B 21218
StatusPublished
Cited by9 cases

This text of 487 B.R. 883 (In re Romious) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Romious, 487 B.R. 883, 2013 WL 221432, 2013 Bankr. LEXIS 262 (Ill. 2013).

Opinion

MEMORANDUM OPINION

JANET S. BAER, Bankruptcy Judge.

Motions for relief from the automatic stay were filed in the above-captioned cases. Both motions raise the same unsettled issue in this jurisdiction — the proper treatment of Illinois property tax sales in chapter 13. Because the issue raised by the motions in the two cases is identical, the Court addresses them together in a single memorandum opinion. For the reasons set forth below, the motions will be denied.

Jurisdiction

The Court has jurisdiction over these matters pursuant to 28 U.S.C. § 1334 and Internal Operating Procedure 15(a) of the United States District Court for the Northern District of Illinois. These are core proceedings under 28 U.S.C. § 157(b)(2)(G).

Romious

Perdido Romious (“Romious”) owns an interest in real property located at 2929 West 140th Street, Blue Island, Cook County, Illinois. Romious failed to pay the general real estate taxes assessed against this property for 2007. In July 2009, Cook County conducted a sale, pursuant to Illinois law, to enforce the tax obligation.1 Lyubomir Alexandrov (“Alex-androv”) purchased the delinquent real estate taxes at the sale. Although the certificate of purchase identifies “Practicorp Incorporated” as the purchaser, there is no dispute that Alexandrov has standing to pursue the motion here.

Pursuant to state law, Alexandrov filed his petition for a tax deed. Romious had until July 13, 2012 to redeem the delinquent taxes and retain the property. Alexandrov’s petition for a tax deed was still pending when, on June 29, 2012, Ro-mious filed for chapter 13 relief. By operation of 11 U.S.C. § 108(b)(2), the redemption period was extended to sixty days from the filing of the petition, to August 28, 2012. To date, the taxes have not been redeemed. Romious’ chapter 13 plan proposes to pay the delinquent real estate taxes over sixty months, through monthly disbursements by the chapter 13 trustee to the Cook County Clerk. Alexandrov objected to confirmation of the plan and moved for relief from the automatic stay to continue with his petition for issuance of a tax deed in the Circuit Court of Cook County.

Watts

The facts in the Watts case are substantially similar. James and Sylvia Watts (collectively “Watts”) own real property located at 9338 South Avalon Avenue, Chicago, Cook County, Illinois. They failed to pay the 2007 real estate taxes assessed against this property. Cook County subsequently sold the delinquent real estate taxes to FNA Cardinal 09, LLC (“FNA”). A certificate of purchase was issued on July 20, 2009.

The redemption period for the 2007 taxes was set to expire on June 8, 2012. Watts filed for chapter 13 relief on May 24, 2012, thereby extending the redemp[885]*885tion period to July 23, 2012. To date, the taxes have not been redeemed. Watts’ chapter 13 plan provides for payment of the delinquent taxes to Cook County over the life of the plan. FNA moved for relief from the automatic stay to continue with its petition for issuance of a tax deed in the Circuit Court of Cook County. In addition, FNA objected to confirmation because the plan allocates payments to the Cook County Treasurer, not FNA, and the plan proposes to pay no interest on the claim.2

Discussion

These cases involve an issue that has divided the bankruptcy and district court judges in this Circuit — whether a debtor can cure delinquent property taxes through a chapter 13 plan even though the redemption period expires during pendency of the bankruptcy case. The disagreement concerns the interplay between 11 U.S.C. § 1322(b)(2) and 11 U.S.C. § 108(b), as well as the nature of a tax purchaser’s interest arising out of the Illinois tax sale procedure.3

Following the reasoning set forth in Judge Wedoffs opinion in Bates, some courts have allowed chapter 13 debtors to modify a tax purchaser’s right to receive payment prior to the expiration of the state law redemption period, and instead provide for payment of the purchaser’s claim in installments over the life of the plan. In re Bates, 270 B.R. 455, 466-67 (Bankr.N.D.Ill.2001); In re Kasco, 378 B.R. 207, 214 (Bankr.N.D.Ill.2007) (Hollis, J.), aff'd, No. 07 C 7270 (N.D.Ill. Aug. 14, 2008) (Norgle, J.); In re McKinney, 341 B.R. 892, 898-99 (Bankr.C.D.Ill.2006), aff'd sub nom. Salta Grp., Inc. v. McKinney, 380 B.R. 515 (C.D.Ill.2008).

In contrast, other courts have held that § 108(b) limits a debtor’s ability to modify a tax purchaser’s claim in chapter 13 to nothing more than a sixty-day extension of the deadline to pay the claim in full. In re Murray, 276 B.R. 869, 875-76 (Bankr. N.D.Ill.2002) (Squires, J.) (stating that “the power of modification of secured claims under § 1322(b)(2) is effectively limited by and to the extended time period afforded for redemptions under § 108(b)”); In re Smith, Ch. 13 Case No. 00 B 22481, slip op. at 11-12 (Bankr.N.D.Ill. July 31, 2002) (Ginsberg, J.) (cure provisions of chapter 13 could not be used to cure tax delinquency after redemption period expired during pendency of bankruptcy case), aff'd sub nom. Smith v. Phoenix Bond & Indem., 288 B.R. 793 (N.D.Ill. 2002) (Moran, J.).

The issue arose more recently before Judge Black in the case of In re La Mont, Case No. 08-BK-32995. Judge Black, relying on Judge Hollis’ opinion in Kasco, orally denied the tax purchaser’s motion to modify the automatic stay in that case. Hr’g Tr. 2:8-17, Feb. 17, 2012, ECF No. 44 in Case No. 08-BK-32995. The tax purchaser appealed.4 The District Court af[886]*886firmed the judgment in a thorough and well-reasoned opinion, with which this Court agrees. In re LaMont, No. 12 C 2481, 2012 WL 6727404, at *9 (N.D.Ill. Dec. 27, 2012) (Leinenweber, J.).

After review of the relevant case law, this Court is persuaded that the better view is to allow a chapter 13 debtor to cure delinquent real estate taxes over the life of the plan. A tax purchaser has an in rem right against property owned by a debtor in a bankruptcy, which gives the tax purchaser a “claim” in the bankruptcy case. Bates, 270 B.R. at 463-64; In re Kasco, 378 B.R. at 211; see also Malee v. Cook Cnty. Clerk (In re Malee), 442 B.R. 130, 135 (Bankr.N.D.Ill.2011) (Cox, J.); In re Commings, 297 B.R. 701, 708 (Bankr. N.D.Ill.2003) (Goldgar, J.). As long as the redemption period has not expired prior to the bankruptcy filing, that claim can be modified under a debtor’s chapter 13 plan. LaMont, 2012 WL 6727404, at *6. Debtors are not restricted by § 108(b), which “must be viewed in light of and in comparison with the broad powers to modify claims accorded Chapter 13 debtors as well as the predominant policy of Chapter 13 to afford debtors the opportunity to save their residential real estate.” McKinney, 341 B.R. at 902. The reason debtors “may use Chapter 13 to pay the tax debt over time ...

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Gan B, LLC v. Sims
575 B.R. 375 (N.D. Illinois, 2017)
In re Jimerson
564 B.R. 430 (N.D. Georgia, 2017)
Title Max v. Hurst (In re Northington)
550 B.R. 644 (M.D. Georgia, 2016)
Title Max v. Hurst (In re Wilber)
551 B.R. 542 (M.D. Georgia, 2016)
In re Aguirre
548 B.R. 525 (N.D. Illinois, 2016)
In re Johnson
513 B.R. 364 (W.D. Wisconsin, 2014)
In re Martin
496 B.R. 323 (S.D. New York, 2013)
In re Bovino
496 B.R. 492 (N.D. Illinois, 2013)
Francis v. Scorpion Group, LLC (In re Francis)
489 B.R. 262 (N.D. Georgia, 2013)

Cite This Page — Counsel Stack

Bluebook (online)
487 B.R. 883, 2013 WL 221432, 2013 Bankr. LEXIS 262, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-romious-ilnb-2013.