Losing Home Over $400 Tax Bill

Senior care advocates repeatedly remind families that oversight is needed in some cases to ensure seniors do not fall victim to financial exploitation. Having an elder law estate planning attorney involved in the process is one way to provide some professional oversight.

However, beyond protecting against scammers and hucksters, many seniors are facing a new financial crisis that is not rooted in illegal misconduct. When on a fixed income and struggling with confusing money issues, some seniors might face incredibly severe financial penalties for falling behind on certain bills or taxes.

For example, CNN Money reported this week on a growing number of individuals who are losing their homes because they owe relatively small sums. A report from the National Consumer Law Center detailed how some states have outdated laws that allow states to sell tax liens on delinquent properties. Essentially this means that instead of the government having a lien on a piece of property that owed back taxes or bills for services like water and gas, private investors own the lien. The investor then collects interests on the overdue bill or, in some cases, forecloses on the home. Some states allow investors to charge staggeringly high interest rates, from 15% to 50%.

Our New York elder law attorneys know that seniors are particularly vulnerable to falling behind in this way, either because of challenges of being on a fixed income or confusion with the bill paying process. The NCLC report details one case of an 81-year old woman who lost the home she lived in for 40 years because she owed $474 on a sewer bill.

The NCLC report noted that seniors with cognitive diseases, like dementia and Alzheimer’s are prone to fall victim to this situation. It is very confusing to follow the changing financial arrangements. The seniors are usually notified of the situation in legalese that many do not understand. As a result, they do nothing, rack up interest debt, eventually default, and often lose their home.

The report elaborated that seniors without family members or who have not visited with elder law attorneys and other professionals were more likely to be hurt by this situation. In one case, an elderly woman who lived alone without family fell back $5,000 on taxes. Eventually, she lost her home and lost about $150,000 in equity that she had accumulated.

Advocates are working to change laws so that interest rates are lowered and adequate warnings are provided to homeowners. It remains unclear if those efforts will be successful, and so putting preventative measures in place now is prudent for local seniors to avoid this situation.

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