Government Sold Woman's Home Over Unpaid Taxes and Kept Profit

Chelsea Koetter has filed a complaint with the Michigan Supreme Court, arguing that the state's debt collection practices are unconstitutional. Her case stems from the 2021 seizure of her home in Manistee County due to an outstanding debt of $3,863.40 related to her 2018 property taxes, which included penalties and fees. This legal challenge follows a precedent set by the Michigan Supreme Court in favor of Uri Rafaeli, whose home was similarly seized and sold, with the government retaining all proceeds. The issue gained national attention when the U.S. Supreme Court ruled last year that Hennepin County, Minnesota, violated constitutional rights by seizing a home over a property tax debt and keeping the surplus from the sale. Chief Justice John Roberts highlighted the injustice of taxpayers losing their homes while the government profits from the sale, emphasizing that the financial burden placed on homeowners far exceeds their original debts. Koetter's complaint outlines the complicated process homeowners must navigate to reclaim any surplus proceeds after a foreclosure. She argues that the system is designed to disadvantage property owners, particularly those unfamiliar with the legal intricacies involved. After falling behind on her taxes, Koetter managed to pay her 2019 and 2020 bills with family assistance but claims a government error contributed to her 2018 debt remaining unpaid. In her filing, Koetter asserts that the government’s actions amount to a form of legalized theft, calling for a reevaluation of the debt collection scheme that allows such practices to occur.