If you reside in Philadelphia and you lose your property to a tax sale, you may still be able to recover it in your name. Under the Pennsylvania law, the initial owner of a property still reserves the right to redeem the property within a 9-month period if the property was sold at a tax sale.
So, what does it really mean to redeem your home? What does the process involve? There is a range of conditions to be met for a homeowner to qualify for tax sale redemption in Philadelphia.
- You or members of your family must be residents of the said property.
- You are required to pay off the full purchase price fee at the tax sale plus 10% of the fee in addition to other accruing costs.
- The nine-month redemption period in Philadelphia kicks off from the date of the tax sale.
The right of Redemption and Chapter 13 Bankruptcy
As an alternative to filing an action for redemption in Philadelphia court, the U.S. Bankruptcy Court for the Eastern District of Pennsylvania (which governs Philadelphia), have determined that a homeowner may redeem the property by paying the redemption amount over sixty months in a Chapter 13 Bankruptcy.
The effect of this ruling is that a property owner does not have to file the redemption action within 9 months from the date of the tax sale, but rather can file a Chapter 13 within that period and have 5 years to pay the redemption amount. As such, this ruling is in line with the objective of the Philadelphia redemption law – to offer a residential property owner an opportunity to get back his or her property sold at a tax sale for a fraction of the value of the property. It is important to note that the redemption can only be used for tax sale – redemption is not permitted in mortgage foreclosure sales.
In addition to the redemption amount, arrears on other secured debt, like mortgage, car loan and other types of debt, like federal taxes may be included in the Chapter 13 Bankruptcy. Chapter 13 is an excellent way to restructure debt.