The debtor had a clear track record of failing to file income tax returns and pay property taxes both pre- and post-petition. Her plan originally omitted any treatment of ongoing postpetition real estate taxes. After the tax purchaser objected, she briefly added language promising to pay them “on or before their due dates,” then later deleted that language entirely.
The court held that, given the debtor’s demonstrated history, confirming a plan that left the tax purchaser exposed to new unpaid postpetition tax liabilities while restricting the purchaser’s remedies was fundamentally unfair. The debtor’s poor postpetition performance on plan payments further undermined good faith. While the court found the budget facially feasible, it declined to confirm and folded the practical non-performance concerns into the good-faith analysis.
Practical points for creditors’ counsel:
1. Tax purchasers have standing as parties in interest and claim holders under Seventh Circuit precedent (LaMont, Romero).
2. A debtor’s history of nonpayment of taxes can support a successful good-faith objection when the plan fails to provide meaningful protections for postpetition taxes.
3. Courts remain willing to look beyond the face of Schedules I & J when the debtor’s actual conduct in the case shows a pattern of noncompliance.
4. Recent takings-clause developments (Tyler / Kidd) have complicated the contingent ownership side of tax-purchase claims, but the core redemption claim and good-faith analysis remain viable tools.
Bottom line: When a debtor has a documented pattern of ignoring tax obligations, creditors should carefully scrutinize whether the plan treats them with “fundamental fairness.” Good faith is not just a rubber stamp.