Do’s and Don’ts During a Property Tax Collection Lawsuit in Texas

Do’s and Don’ts During a Property Tax Collection Lawsuit in Texas

If you have unpaid Texas property taxes, you may be facing a lawsuit from your tax collector. If their lawsuit goes through, it allows your tax collector to foreclose on your home to settle your debt.

They have this power because they hold a tax lien on your property; the only way to regain the lien and regain full legal control of your property is to pay off your debt. If you don’t want to risk losing your home, read on.

When you are delinquent, a lawsuit can come at any time. It is impossible to predict when you will receive the notice in the mail, but when you do, you need to be prepared.

Do you know the costs of a tax collector lawsuit? Do you know what to do when you receive the notice letter? Do you know what defenses, if any, you have in court? Do you know your options?

We have compiled a list of do’s and don’ts to inform you on how to handle a tax collector lawsuit in Texas. While it may seem like there is nothing you can do, it is important to act.


Do’s and Don’ts during a Tax Collector Lawsuit in Texas

DO: Know that when you receive the first letter from the collections firm, you still have time to act.

Most likely, this is not a notice that a lawsuit has been filed against you, but probably a notice that a lawsuit will be filed against you.

If you are at this stage, you have time to take out a property tax loan and settle your debt without adding outrageous legal costs to the matter and risking foreclosure.

DON’T: Ignore the problem. While things may seem hopeless, doing nothing is the worst option—it speeds up court proceedings and increases the likelihood of foreclosure.

If you are going to retain control of your home, you need to be active in handling the lawsuit.

DO: File a response to the lawsuit. Once an actual lawsuit has begun, you must respond.

This will slow down proceedings and give you time to acquire the funds to settle your debt. If you fail to respond, the lawsuit proceeds more quickly.

DON’T: Argue against the amount due. As a property owner, you can only dispute property taxes at the time your property is appraised.

If you disagree with the appraisal value, you can dispute. However, once you are being sued, it is too late to claim overcharging as a defense.

You may be able to make a retroactive valuation protest once you have settled your debt, though. If you win, the court will refund you the money you were overcharged retroactively.

You cannot use this to get out of paying the original bill once a lawsuit has been filed, however.

DO: Keep in mind that tax suits are different than other types of lawsuits.

In other kinds of lawsuits, the two parties can often reach a settlement, which may be less than the original amount.

If you are being sued over delinquent taxes, however, the law does not permit partial settlement or debt forgiveness because of your unfortunate circumstances.

If you can’t acquire the full money needed to pay, they will seize control of your home and put it to auction in order to get their money.

DON’T: Hire an attorney. While this is ultimately your decision, we recommend you consider the legal costs.

If you couldn’t pay your property taxes, you probably don’t want to add an attorney fee to your debt.

In this situation, all an attorney can do for you is stall for time while you find the money to pay. They can’t help you reach a smaller settlement as the law does not permit them for delinquent taxes.

DO: Find a way to settle your debt with the tax collector as soon as possible. If you don’t have the cash on hand to do this, consider your options.

You may be able to arrange a payment plan with your tax collector. If available, this plan likely requires a down-payment of 25% of the debt and can only be set up for 12 to 36-month repayment plans.

A more flexible option is borrowing from a property tax lender. Direct Tax Loan can pay off your debt quickly with no down payment.

We offer long- or short-term payment plans to fit your situation, so you can get out of court and on with life.

DON’T: File for bankruptcy. This should always be the last option on your list. Filing for bankruptcy has long-term consequences far worse than taking out a property tax loan.


The Cost of a Property Tax Collection Lawsuit

When you face a property tax collector’s lawsuit, the cost is far higher than just the original bill. You may already be aware that delinquent property taxes collect high interest rates and penalties.

Did you know these costs can increase your bill by 47% in the first year? Combine that with the legal costs associated with a lawsuit, and you may find yourself drowning in debt.

Here’s what you end up paying for in a property tax collection lawsuit:

  • The original amount of your property tax bill
  • All penalties and interest that have accumulated to date (up to 47% in the first year)
  • The collection fee from the law firm (typically 15-20% of the total amount of 1 & 2)
  • All legal costs associated with the case, including attorney fees

All of this can add up to an outrageous amount of debt.

About the Author: Direct Tax Loan is the largest online platform in the United States that connects top property tax lenders with residential and commercial borrowers. Regardless of where you are located in the state of Texas or Nevada, we’ll be thrilled to connect you with reputable lenders and help you pay off your property tax bill.