What Happens If The Property Owner Files For Bankruptcy

What Happens If The Property Owner Files For Bankruptcy

Keeping the suspense to a minimum the short answer is: YOU WILL GET YOUR INVESTMENT BACK, WITH THE INTEREST PAID IN FULL

The holder of the Tax Lien Certificate is a secured creditor as well as a senior creditor. The Tax Lien Certificate normally always represents only a small fraction of the value of the property.

Of course, there is a downside to the property owner filing for bankruptcy and that is the delay in you Geting your Tax Lien Certificate redeemed. This can take anything from a few months to a few years. It should be looked at as a small bump in the road and not a major disaster; after all, you are still earning those high interest rates.

There are three commonly used forms of bankruptcy:

1. Chapter 7 can be used by both individuals or businesses. It can be filed voluntary or be compelled by creditors in either case a trustee is appointed. An individual may use it as a "fresh start;" a business would use it to dissolve in an orderly manner.
2. Chapter 11 is normally used as a "reorganization bankruptcy;" the debtor remains in possession of their property. A committee is appointed to investigate the Debtors financial situation. During the first 120 days, the Debtor has the exclusive right to propose a repayment plan.
3. Chapter 13 can only be used by individuals and is sometimes called the "wage earner" bankruptcy. The guideline for this bankruptcy is $100,000 or less in unsecured and $300,000 or less in secured debts.

You will need to remain alert if you should receive a notice of bankruptcy. You may well need to file a claim to secure your Tax Lien Certificate we recommend that you seek the advice of an Attorney.

Wealth Generating Books

From Credit Despair to
Credit Millionaire
Don't let credit hold you back any longer. Take what you need to get what you want. A book on how to build real wealth.
Carl Hampton, Nationally Syndicated Financial Columnist

The 16% Solution
How to Get High interest Rates in a Low Interest World with Tax Lien Certificates.
Joel S. Moskowitz, J.D.

Make Money in Real Estate
Tax Liens
How to Guarantee Your Returns
Up to 50%
Chantal Howell Carey & Bill Carey

Rich Dad Poor Dad
What the Rich Teach Their kids about Money - That the Poor and Middle Class Do Not
Robert T. Kiyosaki, with Sharon L. Lechter, CPA

Exchanging Up
How to Build a Real Estate Empire Without Paying Taxes… Using 1031 Exchanges
Gary Gorman, Exchange Expert