Fairground attraction: Michael Jackson's Neverland to be sold at public auction

The troubled superstar faces humiliation after defaulting on his outsize mortgage

Even after the child molestation charges, the botched plastic surgery, the face masks and pyjamas, it's hard to imagine a greater humiliation for Michael Jackson than the public auction of his Neverland ranch, the one-time paradise retreat that stands deserted, a symbol of the train wreck that his life has become.

In theory, at least, the 2,800-acre property in the rolling hills of central California's wine country will go on under the hammer on 19 March, because the singer has defaulted on his mortgage payments. The auction is set to take place on the steps of the Santa Barbara County courthouse, the same institution that put him through the wringer down the years for everything from a breach of contract lawsuit to multiple allegations – none held up in court – that he sexually abused children. Since his acquittal in 2005 on those charges, he has spent most of his time abroad.

Whether – and when – the auction will happen is unclear. People who know the property market say the announcement of an auction is usually just the first step in a process that can take months, and often ends with no auction at all.

A blizzard of press reports over the past few days has suggested everything from imminent financial ruin for Jackson to just another blip in his long, tawdry history of debt servicing that will be ironed out in no time with the settling of another loan.

The truth almost certainly lies somewhere in between. Documents that surfaced last week, show he owes about $150,000 (£75,000) in missed mortgage payments on the Jackson family home in LA's San Fernando Valley, and was deemed to be in default there too, until the default notice was withdrawn on 7 February. A possible explanation is that Jackson recently settled a $600,000 tax bill with the California state authorities, so pacifying them long enough to buy time on his property holdings.

One option is to sell Neverland on the open market. Jackson bought it for about $13m in 1988, and it is now valued at $24.5m. That, at least, is how much money he has taken out of the property through the loan institution that now wants him to auction it off. But even if a buyer offered $24.5m for Neverland, the profit would be subject to both federal and state capital gains tax at a stiff rate. The one upside to an auction is that it would automatically clear his debt on the property completely.