Illinois Tax-Sale Purchasers Hold “Tax Claims” Under § 511(a): 18% Interest Applies via 35 ILCS 200/21-15 in Chapter 13

Case: Bernardo Romero v. Corona Investments, LLC (In re: Bernardo Romero), No. 25-2021
Court: U.S. Court of Appeals for the Seventh Circuit
Date: July 16, 2026
Author: Scudder, Circuit Judge (Hamilton, J., dissenting)

1. Introduction

This Seventh Circuit decision revisits the “complexities at the intersection of Illinois property tax sales and bankruptcy law.” Bernardo Romero, a Chicago homeowner, fell behind on Cook County property taxes from 2018 to 2021. Cook County sold a Certificate of Purchase at a tax sale to Corona Investments, giving Corona the statutory right—subject to redemption and other conditions—to later seek a tax deed and take title.

As Romero’s redemption deadline approached, he filed Chapter 13 bankruptcy, triggering the automatic stay under 11 U.S.C. § 362(a) and preventing Corona from obtaining a tax deed during the bankruptcy. Under In re LaMont, Corona held a secured claim in the Chapter 13 case. The key dispute was not whether interest was owed, but what interest rate must be paid on Corona’s secured claim.

The appeal required the court to interpret and apply 11 U.S.C. § 511(a), which directs that when the Bankruptcy Code requires payment of interest on a “tax claim,” the interest rate “shall be the rate determined under applicable nonbankruptcy law.”

2. Summary of the Opinion

The majority reasoned that Corona’s right to payment is rooted in the underlying property-tax obligation and, consistent with In re LaMont, the tax purchaser holds an “unusual tax lien” and effectively “stands in the shoes of the county” for purposes relevant to § 511(a). Because § 511(a) requires a nonbankruptcy interest rate, the court rejected use of the bankruptcy-derived “Till” formula rate and selected the most analogous Illinois statutory rate: the delinquent-tax interest rate in § 21-15 (18% for Cook County for the relevant years).

The court also addressed a post-argument motion concerning alleged AI-hallucinated quotations in Corona’s brief: it declined to strike the brief or impose sanctions, but issued a pointed reminder that counsel must ensure factual and legal accuracy.

3. Analysis

3.1 Precedents Cited

• In re LaMont, 740 F.3d 397 (7th Cir. 2014).
  Role in this case: Foundational. The majority treats LaMont as nearly dispositive of the claim’s nature: Illinois tax purchasers acquire “an unusual tax lien,” and the purchaser has “a claim against the debtors that may be treated in bankruptcy.” The court “connect[s] the dots” to conclude Corona’s secured claim qualifies as a “tax claim” under § 511(a).
• Till v. SCS Credit Corp., 541 U.S. 465 (2004).
  Role: Provided the Supreme Court’s “formula approach” (prime rate plus risk adjustment) for Chapter 13 cramdown interest rates where the Code does not supply a specific rule. The majority distinguishes and rejects Till here because § 511(a) does supply a rule for “tax claims”: it mandates interest under “applicable nonbankruptcy law,” not bankruptcy-law methodologies.
• Johnson v. Home State Bank, 501 U.S. 78 (1991).
  Role: Supports the breadth of “claim” under the Bankruptcy Code. The court uses Johnson to reinforce that § 511(a)’s “tax claim” builds on the Code’s expansive “claim” concept, covering rights to payment even when held by an entity that is not itself a taxing authority.
• Patterson v. Shumate, 504 U.S. 753 (1992).
  Role: Interprets “applicable nonbankruptcy law” (in § 541(c)(2)) to include federal law, illustrating that “nonbankruptcy” means “outside the Bankruptcy Code,” not necessarily “state law only.” The citation frames the interpretive approach to § 511(a).
• In re Bowers, 759 F.3d 621 (6th Cir. 2014).
  Role: Demonstrates that courts applying § 511(a) look to nonbankruptcy sources—even very low rates—rather than using Till. The majority cites Bowers to show the absence of circuit authority applying Till to a § 511(a) “tax claim.”
• Tyler v. Hennepin County, 598 U.S. 631 (2023).
  Role: Used to contrast county foreclosure limits with tax purchasers’ ability (under Illinois law as described) to retain equity upon taking title, underscoring that the purchaser and the county are not identical actors within the statutory scheme.
• Griffin v. Gould, 391 N.E.2d 124 (Ill. App. Ct. 1979).
  Role: Cited for the proposition that a property owner can be personally liable for real estate taxes—an option available to the county in some circumstances—while Illinois tax purchasers are generally limited to in rem remedies (tax deed).
• A.P. Properties, Inc. v. Goshinsky, 714 N.E.2d 519 (1999).
  Role: Emphasizes limits on a tax purchaser’s ability to “collect money” from the owner, reinforcing the in rem nature of the purchaser’s remedies. The dissent leans on this to argue the purchaser lacks a “tax claim.”
• In re McGuire, 653 B.R. 558 (Bankr. N.D. Ill. 2023); In re Drake, 638 B.R. 96 (Bankr. N.D. Ill. 2022).
  Role: Persuasive, recent bankruptcy decisions adopting the same 18% rate. The Seventh Circuit cites them to show the emerging consensus below.
• O'Connell v. Sanford, 256 Ill. 62, 99 N.E. 885 (1912) (dissent).
  Role: The dissent cites it to argue the county’s tax lien is “extinguished” by a tax sale and not transferred, supporting the dissent’s view that Corona does not hold a § 511(a) “tax claim.”
• Tax Ease Funding, L.P. v. Thompson (In re Kizzee-Jordan), 626 F.3d 239 (5th Cir. 2010) (dissent).
  Role: The dissent contrasts Texas’s statutory subrogation scheme with Illinois’s, arguing other “tax claim” cases are distinguishable.
• In re Villasenor, 581 B.R. 546 (Bankr. N.D. Ill. 2017) (dissent).
  Role: The dissent notes some bankruptcy courts have taken different approaches regarding which Illinois rate is “applicable.”
• Tennessee v. Hildebrand (In re Corrin), 849 F.3d 653 (6th Cir. 2017) (dissent).
  Role: Invoked in the dissent to caution against manufacturing “applicable” nonbankruptcy rates aimed at bankruptcy only.
• Dec v. Mullin, 171 F.4th 940 (7th Cir. 2026); D'Ambrosio v. Meta Platforms Inc., 176 F.4th 928 (7th Cir. 2026); Perez-Castillo v. Blanche, 177 F.4th 837 (7th Cir. 2026) (dissent).
  Role: The dissent cites these sanctions decisions to argue consequences are appropriate for hallucinated citations. The majority declines sanctions here but issues a warning.

3.2 Legal Reasoning

A. Is the tax purchaser’s secured claim a “tax claim” under 11 U.S.C. § 511(a)?

The majority’s holding turns first on classification. Section 511(a) applies only when the Bankruptcy Code requires interest on a “tax claim” (or administrative expense tax). Congress did not define “tax claim,” so the court begins with the Code’s broad definition of “claim” (11 U.S.C. § 101(5)) and Johnson v. Home State Bank’s directive that “claim” is meant to be read expansively.

The key move is functional: although Corona is not a taxing authority, it acquired through Cook County’s tax sale the right to receive payment of delinquent property taxes (with statutory add-ons) and acquired the county’s property-based enforcement path. For the majority, that is enough to deem Corona’s right to payment a “tax claim” within § 511(a), especially given In re LaMont’s description of the purchaser’s position and lien-like rights.

B. If it is a “tax claim,” what interest rate applies under “applicable nonbankruptcy law”?

Once § 511(a) is triggered, the interest rate must come from outside bankruptcy law. The court frames “applicable nonbankruptcy law” broadly (citing Patterson v. Shumate for interpretive guidance) but observes Illinois law does not directly specify an interest rate for the precise posture created by a Chapter 13 filing just before redemption expires.

The court then effectively uses a structured “process of elimination”:

• Reject 35 ILCS 200/21-355 (12% redemption “penalty”): This rate governs what must be paid upon redemption. Because Romero did not redeem, both parties agreed it does not directly answer the question.
• Reject Till: Even if Till supplies a sensible market-based bankruptcy rate, it is a bankruptcy-law method. Section 511(a) demands “nonbankruptcy” law. The majority also notes § 511(a) was enacted after Till, suggesting Congress sought a simplifying rule for tax-claim interest.
• Adopt 35 ILCS 200/21-15 (18% delinquent-tax interest for Cook County): This is the rate that applies to unpaid taxes when the county continues to carry delinquency. The majority treats it as the best “applicable” analog, because the tax purchaser functionally steps into the county’s role in receiving eventual payment and pursuing the in rem path that can culminate in a deed. The majority relies on LaMont’s “stands in the shoes of the county” language to justify the analogy.

The majority acknowledges multiple imperfections in equating the county with the purchaser (e.g., differences between in personam liability and the purchaser’s in rem remedy; timing differences; the purchaser’s ability to retain equity; and administrative/payment-channel differences). But it treats those distinctions as insufficient to dislodge the core premise: the purchaser’s bankruptcy claim is rooted in unpaid property taxes and should accrue the same interest rate the county would charge on delinquent taxes.

C. The dissent’s competing framework

Judge Hamilton’s dissent argues the majority makes two legal errors:

• Not a “tax claim”: The dissent emphasizes that post-sale payments benefit the purchaser, not the public, and that Illinois law “extinguishes” the county’s lien rather than subrogating the purchaser to it (O'Connell v. Sanford). The dissent reads LaMont as deciding only that the purchaser has a bankruptcy “claim,” not that it is a § 511(a) “tax claim.”
• 18% is not “applicable”: Even if it is a tax claim, the dissent contends the 18% delinquent-tax rate is only for the county, and that outside bankruptcy purchasers never receive it. Finding no truly “applicable” nonbankruptcy rate, the dissent would apply Till to determine a market rate.

3.3 Impact

Impact on Chapter 13 practice in Illinois (especially Cook County)

• Higher plan burdens for debtors: By pegging interest at 18% for Cook County, the decision can materially increase monthly plan payments and reduce feasibility for homeowners trying to save their homes near the end of the redemption window.
• Greater predictability for tax-sale purchasers: Purchasers gain a clear appellate rule: their secured claims are “tax claims” under § 511(a), and the interest rate is sourced from Illinois delinquent-tax law rather than bankruptcy-court discretion.
• Doctrinal ripple beyond Illinois: The reasoning—treating a private assignee-like holder of tax-sale rights as holding a “tax claim”—may influence other circuits assessing analogous state schemes, though the dissent highlights that statutory details (e.g., subrogation) matter.

Impact on § 511(a) interpretation

• Broad reading of “tax claim”: The majority endorses a functional approach: a private entity can hold a “tax claim” if its right to payment derives from taxes and tax-enforcement mechanisms, even if it is not a government.
• Constraining Till: The decision reinforces that when § 511(a) applies, bankruptcy-law interest methodologies are displaced in favor of nonbankruptcy sources—even if the fit is imperfect.

Impact on appellate and professional responsibility norms (AI issues)

• The majority’s closing admonition—while declining sanctions—signals continued scrutiny of AI-assisted briefing accuracy. The dissent’s sanction-focused discussion (citing Dec v. Mullin, D'Ambrosio v. Meta Platforms Inc., and Perez-Castillo v. Blanche) underscores the Seventh Circuit’s growing body of authority on consequences for hallucinated or fabricated citations.

4. Complex Concepts Simplified

• Tax sale / Certificate of Purchase: In Illinois, the county can sell a certificate representing the right to receive payment of delinquent taxes. The purchaser may ultimately seek a tax deed (title) if the owner does not redeem.
• Redemption: A statutory window during which the homeowner can keep the property by paying the required redemption amount (taxes plus statutory add-ons). The opinion notes a 12% rate in 35 ILCS 200/21-355 tied to redemption.
• Automatic stay (11 U.S.C. § 362(a)): Filing bankruptcy generally halts collection actions, including steps to obtain a tax deed.
• Secured claim: A claim backed by collateral (here, the home). Under In re LaMont, the tax purchaser’s rights are treated as secured by the property.
• “Present value” and cramdown interest (11 U.S.C. § 1325(a)(5)(B)(ii)): If a plan pays a secured claim over time, interest is typically required so the deferred payments equal the claim’s value “as of” plan effectiveness.
• Section 511(a): A special Bankruptcy Code rule for interest on “tax claims”: instead of using bankruptcy interest standards, courts must use the rate set by “applicable nonbankruptcy law.”
• In rem vs. in personam: “In rem” actions proceed against property (e.g., obtaining a deed); “in personam” actions impose personal liability for money judgments. The opinion contrasts counties’ potential personal-remedy avenues with purchasers’ more limited in rem path.

5. Conclusion

The Seventh Circuit’s central contribution is a concrete, administrable rule for Illinois tax-sale claims in Chapter 13: (1) a private tax-sale purchaser’s secured claim is a “tax claim” for purposes of 11 U.S.C. § 511(a), and (2) the interest rate is supplied by Illinois delinquent-tax law—here, 35 ILCS 200/21-15—yielding 18% annually in Cook County.

The dissent underscores the tension between statutory text (“applicable nonbankruptcy law”), the economic realities of oversecured tax-sale positions, and the practical demands of Chapter 13 feasibility. But unless displaced by en banc review, Supreme Court review, or legislative change, this decision meaningfully reshapes the bargaining and feasibility landscape for Cook County homeowners who file Chapter 13 near redemption deadlines, while providing tax purchasers a high, predictable interest rate anchored in state delinquency law rather than bankruptcy-court discretion.