Can Bankruptcy Remove a Property Tax Lien?

 Posted on January 22, 2026 in Consumer Bankruptcy

In most cases, bankruptcy does not completely remove a property tax lien, even though it can help manage how the debt is handled. Property tax liens are treated differently from credit cards or medical bills because they are tied directly to real estate.

In 2025, data showed that Maryland’s average effective property tax rate was about 1.02 percent of a home’s assessed value, which is higher than the national average and can make falling behind on property taxes a real risk for homeowners.

As of 2026, bankruptcy courts continue to follow strict federal rules when it comes to tax debts and liens. If you are struggling with unpaid property taxes, a Charles County, MD bankruptcy lawyer can help you understand whether bankruptcy may protect your home.

How Does Bankruptcy Affect a Property Tax Lien?

How bankruptcy affects a property tax lien depends on several factors, including the value of your home, the amount of equity you have, and the type of bankruptcy you file. Courts review whether the lien is fully supported by the property’s value and how the tax debt fits into the bankruptcy case. In many situations, the lien remains in place, but bankruptcy can change how the debt is handled.

Even when the lien stays attached to the property, bankruptcy may pause collection efforts, delay a tax sale, or allow the taxes to be paid over time through a court-approved plan. This can give homeowners breathing room and help protect their property while they work toward resolving the debt.

Why Are Property Tax Liens Treated Differently in Bankruptcy?

Property tax liens are considered secured debts. This means the debt is backed by real property. Federal bankruptcy law gives strong protection to tax liens because property taxes fund local services like schools, roads, and emergency response.

Under 11 U.S.C. § 506, a lien is generally allowed to remain in place to the extent it is supported by the value of the property. This means that if the value of the home is less than the total amount of the debt, the claim is split into a secured claim (up to the value of the property) and an unsecured claim (the remainder). If your home has enough equity to cover the lien, bankruptcy alone usually cannot remove it. 

Does Chapter 7 Bankruptcy Remove a Property Tax Lien?

Chapter 7 bankruptcy is designed to clear unsecured debts, but it rarely removes property tax liens. Even if the underlying tax debt is old enough to be discharged, the lien often stays with the property.

In limited situations, a lien may be reduced if it interferes with certain exemptions, but tax liens are much harder to eliminate than other liens.

Can Chapter 13 Bankruptcy Help With a Property Tax Lien?

Chapter 13 bankruptcy is often more helpful for people facing property tax liens. Instead of trying to remove the lien, Chapter 13 allows you to repay the past-due property taxes over time through a court-approved repayment plan.

What Happens to Interest and Penalties on Property Taxes?

Even when a property tax lien remains in place, bankruptcy may help reduce the financial strain. In some cases, penalties may stop increasing after the bankruptcy is filed. Also, interest may be limited depending on the type of bankruptcy and the facts of the case.

This can make the total amount owed more manageable and give homeowners time to catch up.

What Are Common Mistakes People Make With Property Tax Liens?

Many people believe bankruptcy will automatically clear all debts tied to their home. Others wait until a tax sale is already scheduled. Common mistakes include:

• Ignoring early property tax notices

• Filing the wrong type of bankruptcy

• Assuming old tax debt always goes away

• Falling behind on new property taxes during the case

Understanding these risks early can help protect your home.

Schedule a Free 30-Minute Consultation With Our Prince George’s County, MD Bankruptcy Attorney

Property tax lien problems can feel overwhelming, especially when your home is on the line. Working with a relatable attorney at Bloc One Services, LLC who understands the local community can make the process easier to manage. Known as "The People’s Attorney," Attorney Adler is committed to providing the community with quality legal services at a fair and reasonable price.

To learn whether bankruptcy can help with a property tax lien, contact our Charles County, MD bankruptcy lawyer today. Call 240-200-0076 to schedule your free 30-minute consultation and discuss your options.