One of the most common questions I hear from homeowners who have fallen behind on their property taxes is:

“If my house has already been foreclosed for unpaid property taxes, can I file bankruptcy and save the house?”

For years, the answer to that question was generally no.

But Michigan property tax foreclosure law has changed significantly in recent years. And a very important decision from the United States Court of Appeals for the Sixth Circuit has now made the answer considerably more complicated.

There is also a recent United States Supreme Court decision, Pung v. Isabella County, that Michigan homeowners need to understand.

So if you have recently lost your home to a Michigan property tax foreclosure, do not assume that filing bankruptcy is automatically too late.

At the same time, do not assume that you can simply wait and figure things out later.

The timing of the foreclosure, the value of the property, the amount of taxes owed, whether the property has been sold, and whether you timely preserved a claim to any surplus proceeds may all be extremely important.

How Michigan Property Tax Foreclosure Works

Michigan has a three-year process for dealing with delinquent property taxes.

The process begins when property taxes become delinquent. If the taxes remain unpaid, the property eventually moves through forfeiture and foreclosure proceedings.

The critical date is generally March 31 of the third year of delinquency.

If the delinquent taxes are not paid by the statutory deadline, the Foreclosing Governmental Unit obtains title to the property.

This is where things become very important for someone considering bankruptcy.

What if I file bankruptcy after March 31?

Historically, the conventional answer was that bankruptcy could not restore the property because the homeowner no longer owned it.

The county had obtained title.

The automatic stay generally prevents creditors from taking certain actions against property of the bankruptcy estate. But if the homeowner had already lost title, there appeared to be nothing left for the automatic stay to protect.

That remains an important general rule.

But it is no longer the end of the story.

A Major Change: The Sixth Circuit’s Reinhardt Decision

In 2026, the Sixth Circuit Court of Appeals decided In re Reinhardt v. Prince, and the decision is extremely important for Michigan homeowners who have already lost their property through a tax foreclosure.

The facts are striking.

Carrie Ann Reinhardt owned a home in Bay County, Michigan. She owed approximately $5,845 in property taxes, while the property was worth approximately $75,000.

Bay County completed the tax foreclosure and obtained title to the property.

After that happened, Reinhardt filed Chapter 13 bankruptcy and sought to avoid the transfer of the property to the county as a preferential transfer under the Bankruptcy Code.

The bankruptcy court ruled against her, and the district court agreed.

The Sixth Circuit reversed.

The court concluded that, under the circumstances presented, the transfer of the property to the county could qualify as a preferential transfer under 11 U.S.C. § 547.

That is a very big deal.

It means that the statement “The foreclosure is already complete, so bankruptcy can’t do anything” is no longer necessarily correct.

It does not mean that every Michigan tax foreclosure can be undone by filing bankruptcy.

But it does mean that a completed tax foreclosure may deserve a much closer bankruptcy analysis than it received in the past.

What About the Equity in the Property?

There is another important part of this story.

For many years, Michigan’s tax foreclosure system allowed governmental entities to obtain property worth substantially more than the taxes owed and, under the old system, retain the excess value.

For example, a homeowner could owe $5,000 in delinquent property taxes on a home worth $200,000.

The property could ultimately be taken through the tax foreclosure process.

The difference between the amount owed and the value of the property could be enormous.

Michigan law has changed in response to the controversy surrounding the loss of homeowners’ equity. Former owners may now have a right to claim excess proceeds resulting from the sale of the foreclosed property.

But there is a very important catch:

You can lose your right to the surplus money if you miss the statutory deadline.

And the United States Supreme Court’s recent decision in Pung v. Isabella County does not change that deadline.

What Did the Supreme Court Decide in Pung?

In June 2026, the United States Supreme Court decided Pung v. Isabella County.

The case involved a Michigan home that had been foreclosed because of a relatively small property-tax debt.

The property had an assessed value of approximately $194,400 and was ultimately sold at tax auction for $76,008.

The former owner argued that the government should be required to compensate him based upon the property’s fair market value rather than merely returning the difference between the tax debt and the actual auction proceeds.

The Supreme Court rejected that argument.

The Court held that, when a tax sale is fairly conducted, the constitutional measure of just compensation under the Fifth Amendment is generally the actual auction sale price, not the property’s hypothetical fair market value.

In other words, if a home sells at a properly conducted tax auction for $100,000 and the taxes and allowable costs total $10,000, the former owner generally has a constitutional right to the $90,000 surplus—not an additional $100,000 based upon what the property might have been worth on the open market.

The Supreme Court’s decision is important, but it needs to be understood correctly.

Pung did not extend Michigan’s July 1 deadline for claiming surplus proceeds.

It addressed the measure of compensation—not the state’s statutory procedure for preserving a claim to the proceeds.

The July 1 Deadline Is Critical

Under MCL 211.78t, a former owner who wants to preserve a claim to remaining proceeds generally must notify the Foreclosing Governmental Unit by July 1 immediately following the effective date of the foreclosure.

The Michigan Department of Treasury continues to specifically instruct claimants to submit Form 5743, Notice of Intention to Claim Interest in Foreclosure Sales Proceeds, by July 1 following the foreclosure’s effective date.

This is an extremely important deadline.

And Pung did not change it.

The Supreme Court did not say that the July 1 deadline should be extended.

It did not eliminate Form 5743.

It did not create a new federal deadline.

And it did not give former property owners an additional period of time to notify the county that they intend to claim surplus proceeds.

Michigan courts have also treated the requirements of MCL 211.78t as mandatory. Recent Michigan Court of Appeals decisions continue to recognize that a property owner seeking remaining proceeds must timely submit Form 5743 by the July 1 deadline.

What does that mean in practical terms?

If your property was foreclosed effective March 31, 2026, the deadline to submit Form 5743 is generally July 1, 2026.

You should not wait for the property to be auctioned.

You should not wait to see how much the property sells for.

And you should not assume that Pung gives you additional time.

The July 1 deadline still matters.

The Two-Part Surplus-Proceeds Process

There are essentially two important stages to understand.

1. The July 1 Notice of Intent

The first deadline is July 1 following the effective date of the foreclosure.

The former owner must submit the required Notice of Intention to Claim Interest in Foreclosure Sales Proceeds, using Michigan Department of Treasury Form 5743.

The notice must comply with the statutory requirements.

The Michigan statute requires the notice to be notarized and delivered to the Foreclosing Governmental Unit by personal service acknowledged by the FGU or by certified mail, return receipt requested.

This is extremely important because the property may not yet have been sold.

You are preserving your right to claim your share of the money that may ultimately remain after the foreclosure sale.

Do not wait for the auction to take place before addressing this.

2. The Circuit Court Proceeding

If the property is subsequently sold and there are excess proceeds, the process does not necessarily end with the sale.

The Foreclosing Governmental Unit provides notice concerning the remaining proceeds, and the claimant must then follow the statutory procedure for obtaining the money.

Under the current procedure, the claimant generally must file a motion with the appropriate Circuit Court between February 1 and May 15 following the required notice.

For example, Bay County’s current tax-foreclosure procedure explains that the FGU sends Form 5744 by January 31 and that the claimant then has from February 1 through May 15 to file the motion with the Circuit Court.

Again, these are statutory deadlines.

This is not simply a matter of calling the county and saying:

“My house was worth more than the taxes. Please send me the difference.”

There is a formal legal process.

Pung Does Not Give You More Time

I want to emphasize this because Pung could easily be misunderstood.

Someone might read about the Supreme Court’s decision and think:

“The Supreme Court just ruled that I am entitled to my surplus equity, so I still have time to make a claim.”

That is not what the decision says.

Pung establishes that, after a qualifying tax sale, the constitutional measure of compensation is the actual surplus generated by the sale rather than the property’s hypothetical fair market value.

But Michigan’s statutory procedure still requires a former owner seeking remaining proceeds to timely comply with MCL 211.78t, including the July 1 notice requirement.

The Michigan Department of Treasury specifically continues to list July 1 as the deadline for Form 5743.

And recent Michigan Court of Appeals decisions have enforced the statutory requirements, including the July 1 deadline.

So my advice is simple:

If your property has been foreclosed, don’t wait to find out what happens at the auction.

Find out immediately whether you need to file Form 5743.

Bankruptcy and Surplus Proceeds Are Two Different Issues

This is an important distinction.

There are really two separate questions that need to be examined when someone has already lost property through a Michigan tax foreclosure.

First question: Can I recover the property?

This is where the Sixth Circuit’s decision in Reinhardt becomes potentially significant.

Depending upon the facts, a bankruptcy proceeding may provide a mechanism to challenge the completed transfer under the Bankruptcy Code.

That is a complicated legal issue and may require litigation.

Second question: If I cannot recover the property, can I recover my equity?

That is where Michigan’s surplus-proceeds procedure becomes extremely important.

Even if the property cannot be returned, the former owner may have a right to receive excess proceeds generated from the sale.

The two remedies should not be confused with each other.

And depending on the circumstances, a homeowner may need to investigate both.

What If the County Has Not Sold the Property Yet?

This is where I would tell a client to get legal advice immediately.

If the county has completed the foreclosure but has not yet sold the property, there may be significant issues that need to be examined.

Among the questions I would want answered are:

• When did the foreclosure become effective?
• When did title transfer?
• How much were the delinquent taxes?
• What was the fair market value of the property at the time of the transfer?
• Was there substantial equity?
• Has the county sold the property?
• If it was sold, how much did it sell for?
• Has the July 1 deadline passed?
• Was a Form 5743 Notice of Intention to Claim Interest filed?
• Has the county sent a Form 5744 notice concerning surplus proceeds?
• When was the bankruptcy filed?
• Is the debtor eligible for Chapter 13?
• Can the transfer be challenged under § 547 or another provision of the Bankruptcy Code?
• Are there other liens or mortgages against the property?
• Are there potential exemption issues?

These are not questions that can be answered simply by looking at whether the homeowner has received a foreclosure notice.

Bankruptcy Is Not a Magic Undo Button

I want to emphasize this because I have seen people misunderstand what these recent cases mean.

Filing bankruptcy does not automatically restore a home that has already been lost through a Michigan property tax foreclosure.

The automatic stay does not simply reverse everything that happened before the bankruptcy was filed.

Instead, the bankruptcy attorney may need to determine whether the transfer itself is legally avoidable under the Bankruptcy Code.

That can require filing an adversary proceeding and litigating the issue.

In Reinhardt, the Sixth Circuit was dealing with a specific set of facts and a specific Bankruptcy Code provision. It did not announce that every completed Michigan tax foreclosure automatically disappears when someone files bankruptcy.

This is an important distinction.

Don’t Wait Until the Auction

One of the biggest mistakes a homeowner can make is waiting.

If you receive notices that your property is moving through Michigan’s tax foreclosure process, do not wait until the house is scheduled for auction before talking to a bankruptcy attorney.

The earlier the problem is addressed, the more options may be available.

And if the foreclosure has already occurred, don’t necessarily assume that the situation is hopeless.

The Sixth Circuit’s decision in Reinhardt means that a completed Michigan tax foreclosure involving substantial equity may present a bankruptcy issue that deserves serious consideration.

At the same time, the July 1 deadline for preserving a potential surplus-proceeds claim is critical.

And the Supreme Court’s Pung decision does not give you additional time to comply with that deadline.

A Simple Example

Let’s say your home was worth $250,000.

You owed $8,000 in delinquent property taxes.

The tax foreclosure was completed.

The property is later sold at auction for $150,000.

The tax debt and allowable costs consume $8,000.

There could be approximately $142,000 in remaining proceeds.

But that money does not simply appear in your bank account.

You must have timely preserved your right to claim the proceeds under Michigan’s statutory procedure.

That generally means filing Form 5743 by July 1 following the effective date of the foreclosure and then, if applicable, following the subsequent Circuit Court procedure.

And if the July 1 deadline has already passed, you should not assume that Pung extends it.

The deadline remains a serious issue.

The Bottom Line

If your Michigan home has already been foreclosed because of unpaid property taxes, don’t assume that bankruptcy is either an automatic solution or automatically too late.

The traditional answer was that once the March 31 deadline passed and the county obtained title, the homeowner had lost the property and bankruptcy could not bring it back.

The Sixth Circuit’s 2026 decision in Reinhardt has changed the conversation.

In an appropriate case, a completed Michigan tax foreclosure may potentially be challenged as an avoidable transfer in bankruptcy.

And even when the property cannot be recovered, the former owner may have rights to excess proceeds generated from the property’s sale.

The Supreme Court’s 2026 decision in Pung v. Isabella County is also important because it confirms that the constitutional measure of compensation following a qualifying tax sale is generally the actual surplus from the auction, rather than the property’s hypothetical fair market value.

But Pung did not extend Michigan’s July 1 deadline.

If you are entitled to claim surplus proceeds, you generally must still comply with MCL 211.78t and file Form 5743 by July 1 following the effective date of the foreclosure. Michigan’s current guidance continues to say exactly that.

So if you have lost a Michigan property because of delinquent property taxes, I would want to know:

• How much was the property worth?
• How much were the delinquent taxes?
• When did the foreclosure become effective?
• Has the county sold the property?
• What did it sell for?
• Did you timely file Form 5743?
• Have you received Form 5744?
• Has the deadline for filing the Circuit Court motion arrived?
• Is there a potential bankruptcy claim under Reinhardt?

Those facts could make a very significant difference.

The most important thing is not to wait.

A tax foreclosure involves multiple deadlines, and missing one of them can have a permanent financial consequence.

This article discusses general Michigan and federal bankruptcy law and is not a substitute for legal advice concerning a particular property or foreclosure.