Some Michigan homeowners can undo recent tax foreclosures in bankruptcy

Michigan homeowners who file a repayment bankruptcy soon after a tax-foreclosure deadline may still be able to get their homes back. The Sixth Circuit said Bay County’s title transfer to Carrie Reinhardt’s home can be undone if the filing came soon enough after the county took title.

In Reinhardt’s case, Bay County received title on March 31, 2022, after the foreclosure deadline had passed. Reinhardt filed Chapter 13 shortly afterward and asked the court to undo the transfer, arguing that the county should not get to keep the property simply because title had already changed hands.

When title is not the final word

The appeals court sided with Reinhardt and reversed, saying the transfer met the Bankruptcy Code’s preference rules under 11 U.S.C. § 547(b)(4) and 11 U.S.C. § 547(b)(5) as a matter of law. In plain terms, the court said the county’s title claim was not insulated from bankruptcy just because the foreclosure process had run far enough to put the property in the county’s name.

That does not rewrite Michigan’s tax-foreclosure system wholesale. It does, though, give some Chapter 13 debtors a real argument that a recent transfer can be unwound if the timing lines up the way it did here. For homeowners who miss a foreclosure deadline and then move quickly into bankruptcy, that distinction can decide whether the house is gone for good or still within reach.