In re BERNARDO ROMERO Debtor – Do It For The Caselaw

Holding: The court affirmed that a tax purchaser holds a tax claim under the Bankruptcy Code and that the applicable interest rate is eighteen percent per year under Illinois law.
Standard: Section five one one of the Bankruptcy Code
Vote: Panel Decision
Practical effect: Tax purchasers in Illinois Chapter thirteen cases are entitled to an eighteen percent interest rate on secured claims derived from tax sales. This rate is higher than market-based rates and may increase the cost of bankruptcy plans for debtors.

The Seventh Circuit affirmed a bankruptcy court ruling that a tax purchaser holds a tax claim under the Bankruptcy Code. The court held that the applicable interest rate for the claim is determined by Illinois nonbankruptcy law at eighteen percent annually.

Background

Bernardo Romero failed to pay property taxes from two thousand eighteen to two thousand twenty one. Cook County conducted a tax sale and Corona Investments purchased a Certificate of Purchase. Romero filed for Chapter thirteen bankruptcy before the redemption period expired. The bankruptcy court determined Corona held a secured tax claim and applied an eighteen percent interest rate from the Illinois Property Tax Code.

The court’s reasoning

The court analyzed whether a tax purchaser holds a tax claim under Section five one one of the Bankruptcy Code. It concluded that the purchaser steps into the shoes of the county and holds a right to collect overdue taxes plus interest. The court rejected the twelve percent redemption rate because no redemption occurred. It also rejected the Till formula because that method relies on bankruptcy law rather than applicable nonbankruptcy law. The court found that Section two one one five of the Illinois Property Tax Code provides the applicable eighteen percent rate for delinquent taxes in Cook County.

We conclude that the acquisition of a Certificate of Purchase situates a tax purchaser like the county as the underlying and originating taxing authority.

In re BERNARDO ROMERO Debtor, No. 25-2021 (7th Cir. July 16, 2026)

The dissent

What it means going forward

Tax purchasers in Illinois Chapter thirteen cases are entitled to an eighteen percent interest rate on secured claims derived from tax sales. This rate is higher than market-based rates and may increase the cost of bankruptcy plans for debtors.