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HOW TO TAX LIEN
What is a Tax Lien?
A Tax Lien is the first major step the IRS takes against individuals in order to collect back taxes. A Tax Lien gives the IRS a legal claim to your property as security or payment for your tax debt. It is used in order to protect the government's interest in your assets.
When and Why is a Tax Lien Filed?
If you have unpaid back taxes and have not cooperated with the demands of the IRS to make the payments of the tax amount owed, it is likely that eventually you will receive a tax lien, which will then turn into a tax levy.
Here is how the process works. The IRS will first send you a letter with an assessment of your tax liability. This letter will typically state the amount that is unpaid as well as late payment penalty and interest. If the assessment letter is ignored, the IRS will follow up with four more letters, CP-501, CP-502, CP-503, and CP-504. These letters will get more and more threatening as the numbers get higher. The final one of the CP letters mentions it's intent to levy. After these letters are sent to the taxpayer and there is no response or the tax amount is not paid, the IRS determines that they are not able to collect the tax the conventional way, so the IRS will then file a Notice of Federal Tax Lien (NFTL). Once you receive this tax lien, the lien has already been attached to your property. The purpose of the tax lien is to prevent you from selling or borrowing against any of the major assets that you own. With a tax lien in place, it gives legal claim to the IRS over that piece of property that the lien was placed and removes your rights to the property. Moreover, tax liens are public records.
Effects of a Tax Lien
A tax lien makes it very difficult or impossible to get any credit to make additional large purchases, such as a boat, car, or house. Having a lien placed on you by the IRS can be financially crippling for the time it is in place, it pretty much means you can't hold any assets in your name and you have to rely on other people for financing (as lien is on your credit too). All creditors would be notified including your mortgage company. A tax lien will stay in place as long as the IRS can legally enforce action against you (typically 10 years statute of limitations), or until your tax liabilities have been settled with the IRS. The IRS becomes the highest of priority of creditors, so if you sold your house, car, or whatever property the lien was one and you had other liens on that property, the IRS would be the first to be paid.
If you do nothing about the tax lien, the IRS will eventually begin to seize your assets and sell them at a public or private sale. Once the IRS actually starts seizing your assets to satisfy the back tax liability, this is known as a tax levy. A tax levy is the most lethal weapon that the IRS possesses for collecting taxes.
What To Do About a Tax Lien?
It is best to take action as soon as possible when a lien is put in place. It is not a good idea to try to wait it out until the statute of limitations expires because most likely you will get a levy placed on you before then and the IRS will seize your assets before the statute of limitations expires. In order to release a tax lien you will have to file a tax return or file your back taxes (if you have not), then decide whether you want to pay your back taxes in full or settle your back taxes.
Believe it or not, there is a statue of limitations in place which governs how long you have to claim a tax refund, the time frame in which the IRS can audit a tax return, and how long the IRS has to collect back taxes. While you never want to take a chance with anything related to your taxes, you may find yourself in a position where the statue of limitations works either for or against you.
Claim your Refund in Three Years or Less
Does the IRS owe you a tax refund? If so, you only have three years to claim this money. The statue of limitations begins on the original due date of your return. For instance, your 2006 return was due on April 15 or 2007 which means you have until 2010 to file and receive a refund. If you do not file by April 15, 2010, in this example, your tax refund will expire and you will no longer be able to claim the money.
Three Years to Audit your Tax Return
Unless the IRS is suspicious that you committed tax fraud, the statue of limitations does not allow a return to be audited after three years. Sticking with the example above, the IRS would have three years to audit your 2006 tax return or until April 15, 2010. The moment this day comes and goes the IRS can no longer audit you. The only exception, as noted above, is if they feel you have been committing fraud over the years.
More information on IRS Audits
10 Years to Collect a Tax Liability
According to the statue of limitations, the IRS has 10 years to collect outstanding tax liabilities. The "10 year clock" begins to tick from the day the original liability was finalized. Most commonly this is the result of taxes owed on a tax return, but could include other situations such as debt turned up by an audit. The IRS has 10 years to collect the back taxes, as well as interest and penalties.
What are the chances of the IRS overlooking my situation and not collecting on a tax liability? The answer is simple: not very good. You may get lucky, but remember, the IRS is closely watching what you do. If you owe them money, no matter how much or little, there is close to 100 percent chance that they will collect it within 10 years.
As a taxpayer it is important to be aware of the statue of limitations and how it can affect you.
I went to a tax sale yesterday in an out of the way rural municipality in New Jersey. Unlike most of the tax sales in New Jersey this sale was poorly attended. New Jersey is a very competitive state for tax lien investing so this was an uncommon event.
Most serious bidders arrive an hour before the sale starts. At first, I was pleased to see, with less than an hour to go before the sale, that there was only one other bidder there. Then I did my research on the properties that were left in the sale and I discovered why other investors didn't bother with this sale. Out of the thirteen properties that were left in the sale, there was only one decent property. All of the other properties were vacant land and when I looked on the tax maps and checked with the zoning department (this is why I arrive at the sale an hour early) I found out that none of these properties were build-able lots. Most of them were land locked and none of them were large enough to build on, even though one parcel was a three-acre lot.
Since the other bidder there was a professional bidding for an institutional investor, I decided not to bid on any of the properties in the sale. I knew that if I bid on the one property that had a house on it, the professional bidder would bid high premium for it, so I decided not to bid him down and not to bid on any of the other properties since they wouldn't be profitable. I stayed around to see what would happen at the sale.
About fifteen minutes before the sale three other bidders arrived. These investors were new to tax lien sales and did not really know anything about them. They asked the tax collector a few questions before the sale and indicated that they really weren't there to bid but intended to watch since this was their first sale. When the sale began the tax collector let us know which properties had prior liens. Four of the undesirable properties had prior liens. I was not surprised and this just confirmed my suspicions that these properties were not worth bidding on. If they were, then the prior lien holder would have been there to bid on them, or would have paid the subsequent taxes and prevented them from being included in the tax sale.
The tax collector announced the first property, and seeing that no one was bidding on it, one of the inexperienced bidders could not resist. He bid 18% and was awarded the lien (this was the 3 acre landlocked and undersized lot - you need 5 acres to build here). The next three properties were struck off to the township at 18%. The next property was the only one with a house on it and that went to the institutional buyer at 18%. There were eight properties left. Another one went to the township. The temptation to bid and get a get a lien at 18% was too great for the other two new investors; they bought three liens each, each one at 18% interest. Fortunately for them, they were very small liens.
After the sale, I explained to them that they should check the zoning on properties before they bid on them. The tax collector does not tell you before the property is sold if it is unusable property and that is why the owner did not pay the tax. The tax collector only has to convey that industrial properties may be subject to the Environmental Clean Up Act, the Spill Compensation and Control Act, or the Water Pollution Control Act. And this is usually done in fine print; on the notice of the sale and the bidder information sheet.
When it come to buying tax liens, and this goes for other states as well as New Jersey, it's "buyer beware." As the investor, it is your responsibility to make sure that the property that you are purchasing a tax lien certificate on is a valuable piece of property. Even in states like New Jersey, where real estate is at a premium and has increased in value tremendously over the last five years, there are still tax parcels that are worthless. In many areas of the state, municipalities have been steadily increasing the zoning requirements for all types of properties. In many rural areas you need a few acres in order to build a house.
I know that many of you are under the false assumption that if you are a holder of a tax lien certificate; you are guaranteed to get paid. This is not true; it is a misrepresentation that is fostered by real estate infomercials and high priced seminars. The truth is that no one guarantees that you will be paid. You are first in line to get paid, but there are circumstances in which you might not get paid. You do have the right to foreclose on the property if you don't get paid within the redemption period, but what if the property is worthless? Than you have a worthless piece of property that you have to pay taxes on.
Joanne Musa is a Tax Lien Investing Coach and Consultant who works with investors who want to learn how to buy profitable tax lien certificates and tax deeds. She is the president of Tax Lien Consulting LLC, a consulting firm for tax lien investors. She is the author of the e-books: Tax Lien Investing Secrets and Tax Lien Lady's State Guide to Tax Lien and Tax Deed Investing, available at http://www.taxlienconsulting.com
What are tax liens? In its most basic form, a tax lien is a way to legally guarantee that an individual, business or lender will be paid for a debt, by placing a restriction on the debtor's property, which limits them from transferring its title or using it as collateral to obtain further financing.
Tax Liens may be placed on a type of personal property of real estate. The most common lien today is a mortgage. Other types include: mechanic's liens; attorney's liens and tax liens. Each type sports its own rules and deadlines regarding filing, and may vary widely from state to state or even county to county.
There are two types of liens: the particular lien; and the general lien.
Particular liens arise when a person claims a right to retain property, in respect of money or labor expended on the property in question. This kind of lien may be issued in one of three ways: by express contract; from implied contract as in usage of trade); or by legal arrangement of the two parties (as when a contractor finishes contracted work on the property or goods have been salvaged from the sea).
In contrast, general liens are issued when: an agreement is reached between the two parties; by general usage or trade; or by particular usage or trade.
In addition, most liens are also divided into two main groups: legal and federal liens (which can be enforced by law), and equity liens (which are valid only in a court of equity).
To create a valid lien it is important to ensure that the party it is acquired does indeed hold absolute ownership of the property in question; that the person laying claim on the lien has the right to do so; and that the lien s being placed in direct purpose of an agreement of payment made by the two parties.
Liens may be attached to personal property or real estate for the following reasons:
to pay tax debt - a tax lien
to pay for labor services rendered and/or construction supplies
for mortgages
Liens may only be attached by the party owed the money in the first place. Third party placement is prohibited.
A lien may be waived when the debt is either paid in full, or upon agreement between both parties. When liens go unpaid, the lien holder may require immediate payment, or take possession of the property in accordance with local lien laws and regulations. Liens may also be sold at auction for the price of the lien (regardless of the property's value), to a third-party investor. This is most commonly done with tax liens and mortgages.
Liens are a legal entity that must follow all of the laws and regulations of the local municipality and state government where the property is located.
Next | Investments| Lien News
Lien Laws Lien Certificate Property Lien Buy Tax Liens Federal Tax Lien Government Tax Liens
Who doesn't want to make a guaranteed quick buck? Those who are savvy enough - and can generate enough initial investment capital - have found the relative safety of buying tax lien certificates an investment that is a relatively easy and fast way to make money.
Unlike house flipping, which requires the investor to front initial purchasing and remodeling costs - not to mention the stress caused by overseeing large renovation projects and the risk of a market slow-down -- tax lien investment may yield less initial profit on some buys, but is a virtually risk-free investment opportunity.
Property Tax Liens are legal judgments placed on a house or parcel of land for failure by the property owner to pay their local and state real estate taxes. A lien prevents the owner from selling the property, and allows the taxing authority to take ownership (repossess), or otherwise sell the property in order to recoup lost tax revenue.
Purchasing Lien Certificates is an easy way to either make a small profit immediately, or a larger one in the near future.
Investing in tax lien certificates is not the same as buying the property outright. When purchasing a lien certificate, the investor is actually paying the outstanding tax bill at auction for the property owner, with the promise of being paid back (with interest), in a timely manner.
If the owner can produce the funds necessary to buy the lean back, the investor has the satisfaction of knowing that he has helped a property owner save his home from foreclosure, while making a small profit on the interest the transaction generates If, however, the property owner fails to pay the certificate owner back within the specified timetable, then the lien certificate owner may take ownership of the property and either sell it at a lien deed auction; make necessary repairs and upgrades and sell it on the open real estate market; or sell it as is to another real estate investor.
Acquiring property in this manner is virtually risk-free considering that most tax lien certificates are purchased for a fraction of the value of he house or land.
There are some things investors of this type should watch out for before buying any tax lien certificate investment:
Be sure the property is indeed worth more than the taxes owed. Although not common, there have been reports of property owners allowing unusable properties to be sold at auction in order to get out from underneath their tax burden. Always inspect the property and check to make sure it is a profitable purchase.
Have Cash On Hand. Most tax lien auctions require the full purchase price at the time of sale - either in cash, or a certified bank draft.
Understand the rules of tax lien certificate sales in your area. While the basic rules are the same, every county and state has their own individual laws regulating the sale of tax liens and the acquisition of property. Research your local laws carefully to fully understand your responsibilities and limitations as the lien holder.
While purchasing tax lien certificate investments can yield a tidy profit for the careful investor, every real estate transaction does hold some risk, and should be carefully considered before making any purchase.
Investing in tax liens is the newest craze of making money real estate.. Buying up delinquent taxpayers property liens can be a wonderful opportunity for investors with little real estate experience, it is virtually a risk-free investment opportunity.
Tax Liens offer investors a chance to either make a small amount of money very quickly by lending delinquent taxpayers the money to pay off their tax debt in the hope of saving their property from foreclosure, for a tidy sum of interest; or the chance to buy decent properties for a fraction of their actual real market worth, and making large sums of money when the property is resold. It's being reported that savvy investors may be making as much as 50-75% on their initial investment within weeks.
Are distressed properties the only ones being offered at tax lien sales? Absolutely not! There are homes and land parcels all over the United States put up for tax lien auctions daily. The range of quality is astounding. While some may be fixer-uppers that have been neglected over the years, by the homeowner's inability to pay for repairs, many more are top-flight homes that have been seized when the property owner fails to pay the taxes due to a job loss, death in the family, divorce, or other reason. Oftentimes, open land parcels are made available because someone inherited it and didn't think it was worth much and failed to pay the taxes.
Care should be taken, however, to research each property carefully before submitting a bid. The odds are there will be no information offered at the time of the sale, so all inspections and reviews need to be taken care of beforehand. There have been reports of buyers purchasing property sight unseen at auction only to discover that the new 3 acre lot they purchased with the hope of building on it sits in the middle of a creek bed, or is landlocked with no way to get to it. Others have anxiously gone to check out their new 4-bedroom home only to find no more than a shack.
Tax Liens are generally offered at auction by the taxing authority in two ways: either as a tax lien certificate; or a tax lien deed.
A tax lien certificate allows the investor to pay off the tax debt for the homeowner, and receive a pre-determined amount of interest when the debt is paid in full during the paying period established at the time of sale.. Although the profit margin may be small on this type of investment, the opportunity to acquire a complete property for pennies on the dollar can be quite profitable in the event the homeowner fails to pay the current debt on time. This type of investment can yield a quick turnaround numbering thousands if the property is in good shape and can be sold relatively quickly on the open real estate market.
Tax Lien Deeds may garner a smaller profit, since the investor is paying for the property upfront, but eliminates any ill-will with the current owner since possession is immediate. Even so, many investors find that they can make quite a bit of money on these types of property if they choose carefully and are patient enough to wait for just the right "gem" to come up at auction.
One important thing to remember when buying tax liens: these investments can not be financed. Cash is needed at the time of sale to complete the transaction. Even so, most investors find their time, trouble and money well worth any risk since profit margins are often so lucrative.
Investing in tax liens is the newest craze of making money real estate.. Buying up delinquent taxpayers property liens can be a wonderful opportunity for investors with little real estate experience, it is virtually a risk-free investment opportunity.
Tax Liens offer investors a chance to either make a small amount of money very quickly by lending delinquent taxpayers the money to pay off their tax debt in the hope of saving their property from foreclosure, for a tidy sum of interest; or the chance to buy decent properties for a fraction of their actual real market worth, and making large sums of money when the property is resold. It's being reported that savvy investors may be making as much as 50-75% on their initial investment within weeks.
Are distressed properties the only ones being offered at tax lien sales? Absolutely not! There are homes and land parcels all over the United States put up for tax lien auctions daily. The range of quality is astounding. While some may be fixer-uppers that have been neglected over the years, by the homeowner's inability to pay for repairs, many more are top-flight homes that have been seized when the property owner fails to pay the taxes due to a job loss, death in the family, divorce, or other reason. Oftentimes, open land parcels are made available because someone inherited it and didn't think it was worth much and failed to pay the taxes.
Care should be taken, however, to research each property carefully before submitting a bid. The odds are there will be no information offered at the time of the sale, so all inspections and reviews need to be taken care of beforehand. There have been reports of buyers purchasing property sight unseen at auction only to discover that the new 3 acre lot they purchased with the hope of building on it sits in the middle of a creek bed, or is landlocked with no way to get to it. Others have anxiously gone to check out their new 4-bedroom home only to find no more than a shack.
Tax Liens are generally offered at auction by the taxing authority in two ways: either as a tax lien certificate; or a tax lien deed.
A tax lien certificate allows the investor to pay off the tax debt for the homeowner, and receive a pre-determined amount of interest when the debt is paid in full during the paying period established at the time of sale.. Although the profit margin may be small on this type of investment, the opportunity to acquire a complete property for pennies on the dollar can be quite profitable in the event the homeowner fails to pay the current debt on time. This type of investment can yield a quick turnaround numbering thousands if the property is in good shape and can be sold relatively quickly on the open real estate market.
Tax Lien Deeds may garner a smaller profit, since the investor is paying for the property upfront, but eliminates any ill-will with the current owner since possession is immediate. Even so, many investors find that they can make quite a bit of money on these types of property if they choose carefully and are patient enough to wait for just the right "gem" to come up at auction.
One important thing to remember when buying tax liens: these investments can not be financed. Cash is needed at the time of sale to complete the transaction. Even so, most investors find their time, trouble and money well worth any risk since profit margins are often so lucrative.
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A Tax Lien is the first major step the IRS takes against individuals in order to collect back taxes. A Tax Lien gives the IRS a legal claim to your property as security or payment for your tax debt. It is used in order to protect the government's interest in your assets.
When and Why is a Tax Lien Filed?
If you have unpaid back taxes and have not cooperated with the demands of the IRS to make the payments of the tax amount owed, it is likely that eventually you will receive a tax lien, which will then turn into a tax levy.
Here is how the process works. The IRS will first send you a letter with an assessment of your tax liability. This letter will typically state the amount that is unpaid as well as late payment penalty and interest. If the assessment letter is ignored, the IRS will follow up with four more letters, CP-501, CP-502, CP-503, and CP-504. These letters will get more and more threatening as the numbers get higher. The final one of the CP letters mentions it's intent to levy. After these letters are sent to the taxpayer and there is no response or the tax amount is not paid, the IRS determines that they are not able to collect the tax the conventional way, so the IRS will then file a Notice of Federal Tax Lien (NFTL). Once you receive this tax lien, the lien has already been attached to your property. The purpose of the tax lien is to prevent you from selling or borrowing against any of the major assets that you own. With a tax lien in place, it gives legal claim to the IRS over that piece of property that the lien was placed and removes your rights to the property. Moreover, tax liens are public records.
Effects of a Tax Lien
A tax lien makes it very difficult or impossible to get any credit to make additional large purchases, such as a boat, car, or house. Having a lien placed on you by the IRS can be financially crippling for the time it is in place, it pretty much means you can't hold any assets in your name and you have to rely on other people for financing (as lien is on your credit too). All creditors would be notified including your mortgage company. A tax lien will stay in place as long as the IRS can legally enforce action against you (typically 10 years statute of limitations), or until your tax liabilities have been settled with the IRS. The IRS becomes the highest of priority of creditors, so if you sold your house, car, or whatever property the lien was one and you had other liens on that property, the IRS would be the first to be paid.
If you do nothing about the tax lien, the IRS will eventually begin to seize your assets and sell them at a public or private sale. Once the IRS actually starts seizing your assets to satisfy the back tax liability, this is known as a tax levy. A tax levy is the most lethal weapon that the IRS possesses for collecting taxes.
What To Do About a Tax Lien?
It is best to take action as soon as possible when a lien is put in place. It is not a good idea to try to wait it out until the statute of limitations expires because most likely you will get a levy placed on you before then and the IRS will seize your assets before the statute of limitations expires. In order to release a tax lien you will have to file a tax return or file your back taxes (if you have not), then decide whether you want to pay your back taxes in full or settle your back taxes.
Believe it or not, there is a statue of limitations in place which governs how long you have to claim a tax refund, the time frame in which the IRS can audit a tax return, and how long the IRS has to collect back taxes. While you never want to take a chance with anything related to your taxes, you may find yourself in a position where the statue of limitations works either for or against you.
Claim your Refund in Three Years or Less
Does the IRS owe you a tax refund? If so, you only have three years to claim this money. The statue of limitations begins on the original due date of your return. For instance, your 2006 return was due on April 15 or 2007 which means you have until 2010 to file and receive a refund. If you do not file by April 15, 2010, in this example, your tax refund will expire and you will no longer be able to claim the money.
Three Years to Audit your Tax Return
Unless the IRS is suspicious that you committed tax fraud, the statue of limitations does not allow a return to be audited after three years. Sticking with the example above, the IRS would have three years to audit your 2006 tax return or until April 15, 2010. The moment this day comes and goes the IRS can no longer audit you. The only exception, as noted above, is if they feel you have been committing fraud over the years.
More information on IRS Audits
10 Years to Collect a Tax Liability
According to the statue of limitations, the IRS has 10 years to collect outstanding tax liabilities. The "10 year clock" begins to tick from the day the original liability was finalized. Most commonly this is the result of taxes owed on a tax return, but could include other situations such as debt turned up by an audit. The IRS has 10 years to collect the back taxes, as well as interest and penalties.
What are the chances of the IRS overlooking my situation and not collecting on a tax liability? The answer is simple: not very good. You may get lucky, but remember, the IRS is closely watching what you do. If you owe them money, no matter how much or little, there is close to 100 percent chance that they will collect it within 10 years.
As a taxpayer it is important to be aware of the statue of limitations and how it can affect you.
I went to a tax sale yesterday in an out of the way rural municipality in New Jersey. Unlike most of the tax sales in New Jersey this sale was poorly attended. New Jersey is a very competitive state for tax lien investing so this was an uncommon event.
Most serious bidders arrive an hour before the sale starts. At first, I was pleased to see, with less than an hour to go before the sale, that there was only one other bidder there. Then I did my research on the properties that were left in the sale and I discovered why other investors didn't bother with this sale. Out of the thirteen properties that were left in the sale, there was only one decent property. All of the other properties were vacant land and when I looked on the tax maps and checked with the zoning department (this is why I arrive at the sale an hour early) I found out that none of these properties were build-able lots. Most of them were land locked and none of them were large enough to build on, even though one parcel was a three-acre lot.
Since the other bidder there was a professional bidding for an institutional investor, I decided not to bid on any of the properties in the sale. I knew that if I bid on the one property that had a house on it, the professional bidder would bid high premium for it, so I decided not to bid him down and not to bid on any of the other properties since they wouldn't be profitable. I stayed around to see what would happen at the sale.
About fifteen minutes before the sale three other bidders arrived. These investors were new to tax lien sales and did not really know anything about them. They asked the tax collector a few questions before the sale and indicated that they really weren't there to bid but intended to watch since this was their first sale. When the sale began the tax collector let us know which properties had prior liens. Four of the undesirable properties had prior liens. I was not surprised and this just confirmed my suspicions that these properties were not worth bidding on. If they were, then the prior lien holder would have been there to bid on them, or would have paid the subsequent taxes and prevented them from being included in the tax sale.
The tax collector announced the first property, and seeing that no one was bidding on it, one of the inexperienced bidders could not resist. He bid 18% and was awarded the lien (this was the 3 acre landlocked and undersized lot - you need 5 acres to build here). The next three properties were struck off to the township at 18%. The next property was the only one with a house on it and that went to the institutional buyer at 18%. There were eight properties left. Another one went to the township. The temptation to bid and get a get a lien at 18% was too great for the other two new investors; they bought three liens each, each one at 18% interest. Fortunately for them, they were very small liens.
After the sale, I explained to them that they should check the zoning on properties before they bid on them. The tax collector does not tell you before the property is sold if it is unusable property and that is why the owner did not pay the tax. The tax collector only has to convey that industrial properties may be subject to the Environmental Clean Up Act, the Spill Compensation and Control Act, or the Water Pollution Control Act. And this is usually done in fine print; on the notice of the sale and the bidder information sheet.
When it come to buying tax liens, and this goes for other states as well as New Jersey, it's "buyer beware." As the investor, it is your responsibility to make sure that the property that you are purchasing a tax lien certificate on is a valuable piece of property. Even in states like New Jersey, where real estate is at a premium and has increased in value tremendously over the last five years, there are still tax parcels that are worthless. In many areas of the state, municipalities have been steadily increasing the zoning requirements for all types of properties. In many rural areas you need a few acres in order to build a house.
I know that many of you are under the false assumption that if you are a holder of a tax lien certificate; you are guaranteed to get paid. This is not true; it is a misrepresentation that is fostered by real estate infomercials and high priced seminars. The truth is that no one guarantees that you will be paid. You are first in line to get paid, but there are circumstances in which you might not get paid. You do have the right to foreclose on the property if you don't get paid within the redemption period, but what if the property is worthless? Than you have a worthless piece of property that you have to pay taxes on.
Joanne Musa is a Tax Lien Investing Coach and Consultant who works with investors who want to learn how to buy profitable tax lien certificates and tax deeds. She is the president of Tax Lien Consulting LLC, a consulting firm for tax lien investors. She is the author of the e-books: Tax Lien Investing Secrets and Tax Lien Lady's State Guide to Tax Lien and Tax Deed Investing, available at http://www.taxlienconsulting.com
What are tax liens? In its most basic form, a tax lien is a way to legally guarantee that an individual, business or lender will be paid for a debt, by placing a restriction on the debtor's property, which limits them from transferring its title or using it as collateral to obtain further financing.
Tax Liens may be placed on a type of personal property of real estate. The most common lien today is a mortgage. Other types include: mechanic's liens; attorney's liens and tax liens. Each type sports its own rules and deadlines regarding filing, and may vary widely from state to state or even county to county.
There are two types of liens: the particular lien; and the general lien.
Particular liens arise when a person claims a right to retain property, in respect of money or labor expended on the property in question. This kind of lien may be issued in one of three ways: by express contract; from implied contract as in usage of trade); or by legal arrangement of the two parties (as when a contractor finishes contracted work on the property or goods have been salvaged from the sea).
In contrast, general liens are issued when: an agreement is reached between the two parties; by general usage or trade; or by particular usage or trade.
In addition, most liens are also divided into two main groups: legal and federal liens (which can be enforced by law), and equity liens (which are valid only in a court of equity).
To create a valid lien it is important to ensure that the party it is acquired does indeed hold absolute ownership of the property in question; that the person laying claim on the lien has the right to do so; and that the lien s being placed in direct purpose of an agreement of payment made by the two parties.
Liens may be attached to personal property or real estate for the following reasons:
to pay tax debt - a tax lien
to pay for labor services rendered and/or construction supplies
for mortgages
Liens may only be attached by the party owed the money in the first place. Third party placement is prohibited.
A lien may be waived when the debt is either paid in full, or upon agreement between both parties. When liens go unpaid, the lien holder may require immediate payment, or take possession of the property in accordance with local lien laws and regulations. Liens may also be sold at auction for the price of the lien (regardless of the property's value), to a third-party investor. This is most commonly done with tax liens and mortgages.
Liens are a legal entity that must follow all of the laws and regulations of the local municipality and state government where the property is located.
Next | Investments| Lien News
Lien Laws Lien Certificate Property Lien Buy Tax Liens Federal Tax Lien Government Tax Liens
Who doesn't want to make a guaranteed quick buck? Those who are savvy enough - and can generate enough initial investment capital - have found the relative safety of buying tax lien certificates an investment that is a relatively easy and fast way to make money.
Unlike house flipping, which requires the investor to front initial purchasing and remodeling costs - not to mention the stress caused by overseeing large renovation projects and the risk of a market slow-down -- tax lien investment may yield less initial profit on some buys, but is a virtually risk-free investment opportunity.
Property Tax Liens are legal judgments placed on a house or parcel of land for failure by the property owner to pay their local and state real estate taxes. A lien prevents the owner from selling the property, and allows the taxing authority to take ownership (repossess), or otherwise sell the property in order to recoup lost tax revenue.
Purchasing Lien Certificates is an easy way to either make a small profit immediately, or a larger one in the near future.
Investing in tax lien certificates is not the same as buying the property outright. When purchasing a lien certificate, the investor is actually paying the outstanding tax bill at auction for the property owner, with the promise of being paid back (with interest), in a timely manner.
If the owner can produce the funds necessary to buy the lean back, the investor has the satisfaction of knowing that he has helped a property owner save his home from foreclosure, while making a small profit on the interest the transaction generates If, however, the property owner fails to pay the certificate owner back within the specified timetable, then the lien certificate owner may take ownership of the property and either sell it at a lien deed auction; make necessary repairs and upgrades and sell it on the open real estate market; or sell it as is to another real estate investor.
Acquiring property in this manner is virtually risk-free considering that most tax lien certificates are purchased for a fraction of the value of he house or land.
There are some things investors of this type should watch out for before buying any tax lien certificate investment:
Be sure the property is indeed worth more than the taxes owed. Although not common, there have been reports of property owners allowing unusable properties to be sold at auction in order to get out from underneath their tax burden. Always inspect the property and check to make sure it is a profitable purchase.
Have Cash On Hand. Most tax lien auctions require the full purchase price at the time of sale - either in cash, or a certified bank draft.
Understand the rules of tax lien certificate sales in your area. While the basic rules are the same, every county and state has their own individual laws regulating the sale of tax liens and the acquisition of property. Research your local laws carefully to fully understand your responsibilities and limitations as the lien holder.
While purchasing tax lien certificate investments can yield a tidy profit for the careful investor, every real estate transaction does hold some risk, and should be carefully considered before making any purchase.
Investing in tax liens is the newest craze of making money real estate.. Buying up delinquent taxpayers property liens can be a wonderful opportunity for investors with little real estate experience, it is virtually a risk-free investment opportunity.
Tax Liens offer investors a chance to either make a small amount of money very quickly by lending delinquent taxpayers the money to pay off their tax debt in the hope of saving their property from foreclosure, for a tidy sum of interest; or the chance to buy decent properties for a fraction of their actual real market worth, and making large sums of money when the property is resold. It's being reported that savvy investors may be making as much as 50-75% on their initial investment within weeks.
Are distressed properties the only ones being offered at tax lien sales? Absolutely not! There are homes and land parcels all over the United States put up for tax lien auctions daily. The range of quality is astounding. While some may be fixer-uppers that have been neglected over the years, by the homeowner's inability to pay for repairs, many more are top-flight homes that have been seized when the property owner fails to pay the taxes due to a job loss, death in the family, divorce, or other reason. Oftentimes, open land parcels are made available because someone inherited it and didn't think it was worth much and failed to pay the taxes.
Care should be taken, however, to research each property carefully before submitting a bid. The odds are there will be no information offered at the time of the sale, so all inspections and reviews need to be taken care of beforehand. There have been reports of buyers purchasing property sight unseen at auction only to discover that the new 3 acre lot they purchased with the hope of building on it sits in the middle of a creek bed, or is landlocked with no way to get to it. Others have anxiously gone to check out their new 4-bedroom home only to find no more than a shack.
Tax Liens are generally offered at auction by the taxing authority in two ways: either as a tax lien certificate; or a tax lien deed.
A tax lien certificate allows the investor to pay off the tax debt for the homeowner, and receive a pre-determined amount of interest when the debt is paid in full during the paying period established at the time of sale.. Although the profit margin may be small on this type of investment, the opportunity to acquire a complete property for pennies on the dollar can be quite profitable in the event the homeowner fails to pay the current debt on time. This type of investment can yield a quick turnaround numbering thousands if the property is in good shape and can be sold relatively quickly on the open real estate market.
Tax Lien Deeds may garner a smaller profit, since the investor is paying for the property upfront, but eliminates any ill-will with the current owner since possession is immediate. Even so, many investors find that they can make quite a bit of money on these types of property if they choose carefully and are patient enough to wait for just the right "gem" to come up at auction.
One important thing to remember when buying tax liens: these investments can not be financed. Cash is needed at the time of sale to complete the transaction. Even so, most investors find their time, trouble and money well worth any risk since profit margins are often so lucrative.
Investing in tax liens is the newest craze of making money real estate.. Buying up delinquent taxpayers property liens can be a wonderful opportunity for investors with little real estate experience, it is virtually a risk-free investment opportunity.
Tax Liens offer investors a chance to either make a small amount of money very quickly by lending delinquent taxpayers the money to pay off their tax debt in the hope of saving their property from foreclosure, for a tidy sum of interest; or the chance to buy decent properties for a fraction of their actual real market worth, and making large sums of money when the property is resold. It's being reported that savvy investors may be making as much as 50-75% on their initial investment within weeks.
Are distressed properties the only ones being offered at tax lien sales? Absolutely not! There are homes and land parcels all over the United States put up for tax lien auctions daily. The range of quality is astounding. While some may be fixer-uppers that have been neglected over the years, by the homeowner's inability to pay for repairs, many more are top-flight homes that have been seized when the property owner fails to pay the taxes due to a job loss, death in the family, divorce, or other reason. Oftentimes, open land parcels are made available because someone inherited it and didn't think it was worth much and failed to pay the taxes.
Care should be taken, however, to research each property carefully before submitting a bid. The odds are there will be no information offered at the time of the sale, so all inspections and reviews need to be taken care of beforehand. There have been reports of buyers purchasing property sight unseen at auction only to discover that the new 3 acre lot they purchased with the hope of building on it sits in the middle of a creek bed, or is landlocked with no way to get to it. Others have anxiously gone to check out their new 4-bedroom home only to find no more than a shack.
Tax Liens are generally offered at auction by the taxing authority in two ways: either as a tax lien certificate; or a tax lien deed.
A tax lien certificate allows the investor to pay off the tax debt for the homeowner, and receive a pre-determined amount of interest when the debt is paid in full during the paying period established at the time of sale.. Although the profit margin may be small on this type of investment, the opportunity to acquire a complete property for pennies on the dollar can be quite profitable in the event the homeowner fails to pay the current debt on time. This type of investment can yield a quick turnaround numbering thousands if the property is in good shape and can be sold relatively quickly on the open real estate market.
Tax Lien Deeds may garner a smaller profit, since the investor is paying for the property upfront, but eliminates any ill-will with the current owner since possession is immediate. Even so, many investors find that they can make quite a bit of money on these types of property if they choose carefully and are patient enough to wait for just the right "gem" to come up at auction.
One important thing to remember when buying tax liens: these investments can not be financed. Cash is needed at the time of sale to complete the transaction. Even so, most investors find their time, trouble and money well worth any risk since profit margins are often so lucrative.
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DO IT YOURSELF CREDIT REPAIR
Credit Repair: How to Help Yourself
You see the advertisements in newspapers, on TV, and on the Internet. You hear them on the radio. You get fliers in the mail, and maybe even calls offering credit repair services. They all make the same claims:
“Credit problems? No problem!”
“We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!”
“We can erase your bad credit — 100% guaranteed.”
“Create a new credit identity — legally.”
The Federal Trade Commission (FTC) says do yourself a favor and save some money, too. Don’t believe these claims: they’re very likely signs of a scam. Indeed, attorneys at the nation’s consumer protection agency say they’ve never seen a legitimate credit repair operation making those claims. The fact is there’s no quick fix for creditworthiness. You can improve your credit report legitimately, but it takes time, a conscious effort, and sticking to a personal debt repayment plan.
Recognizing a Credit Repair Scam
Everyday, companies target consumers who have poor credit histories with promises to clean up their credit report so they can get a car loan, a home mortgage, insurance, or even a job once they pay them a fee for the service. The truth is, these companies can’t deliver an improved credit report for you using the tactics they promote. It’s illegal: No one can remove accurate negative information from your credit report. So after you pay them hundreds or thousands of dollars in fees, you’re left with the same credit report and someone else has your money.
If you see a credit repair offer, here’s how to tell if the company behind it is up to no good:
The company wants you to pay for credit repair services before they provide any services. Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised.
The company doesn’t tell you your rights and what you can do for yourself for free.
The company recommends that you do not contact any of the three major national credit reporting companies directly.
The company tells you they can get rid of most or all the negative credit information in your credit report, even if that information is accurate and current.
The company suggests that you try to invent a “new” credit identity — and then, a new credit report — by applying for an Employer Identification Number to use instead of your Social Security number.
The company advises you to dispute all the information in your credit report, regardless of its accuracy or timeliness.
If you follow illegal advice and commit fraud, you may find yourself in legal hot water, too: It’s a federal crime to lie on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses. You could be charged and prosecuted for mail or wire fraud if you use the mail, telephone, or Internet to apply for credit and provide false information.
Your Rights Regarding Credit Repair
No one can legally remove accurate and timely negative information from a credit report. The law allows you to ask for an investigation of information in your file that you dispute as inaccurate or incomplete. There is no charge for this. Some people hire a company to investigate on their behalf, but anything a credit repair clinic can do legally, you can do for yourself at little or no cost. According to the Fair Credit Reporting Act (FCRA):
You’re entitled to a free report if a company takes “adverse action” against you, like denying your application for credit, insurance, or employment. You have to ask for your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the consumer reporting company. You’re also entitled to one free report a year if you’re unemployed and plan to look for a job within 60 days; if you’re on welfare; or if your report is inaccurate because of fraud, including identity theft.
Each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — is required to provide you with a free copy of your credit report once every 12 months, if you ask for it. The three companies have a central website, a toll-free telephone number, and a mailing address for consumers to order the free annual credit reports the government entitles them to. To order, click on annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
You can use the form in this brochure, or you can print it from ftc.gov/credit. You may order reports from each of the three consumer reporting companies at the same time, or you can stagger your requests, ordering one from each company throughout the year from the central address. Don’t contact the three nationwide consumer reporting companies individually or at another address because you may end up paying for a report that you’re entitled to get for free. In fact, each consumer reporting company may charge you up to $10.50 to purchase an additional copy of your report within a 12-month period.
It doesn’t cost anything to dispute mistakes or outdated items on your credit report. Under the FCRA, both the consumer reporting company and the information provider (that is, the person, company, or organization that provides information about you to a consumer reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under the FCRA, contact the consumer reporting company and the information provider.
Helping Yourself
Step 1: Tell the consumer reporting company, in writing, what information you think is inaccurate. Include copies (NOT originals) of any documents that support your position. In addition to providing your complete name and address, your letter should identify each item in your report you dispute; state the facts and the reasons you dispute the information, and ask that it be removed or corrected. You may want to enclose a copy of your report, and circle the items in question. Send your letter by certified mail, “return receipt requested,” so you can document that the consumer reporting company received it. Keep copies of your dispute letter and enclosures.
Your letter may look something like the one below.
Sample Dispute Letter
Date
Your Name
Your Address,
City, State, Zip Code
Complaint Department
Name of Company
Address
City, State, Zip Code
Dear Sir or Madam:
I am writing to dispute the following information in my file. The items I dispute also are encircled on the attached copy of the report I received.
This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information.
Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please investigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.
Sincerely,
Your name
Enclosures: (List what you are enclosing.)
Consumer reporting companies must investigate the items you question within 30 days — unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the consumer reporting company, it is required to investigate, review the relevant information, and report the results back to the consumer reporting company. If this investigation reveals that the disputed information is inaccurate, the information provider has to notify the nationwide consumer reporting companies so they can correct it in your file.
When the investigation is complete, the consumer reporting company must give you the results in writing, too, and a free copy of your report if the dispute results in a change. If an item is changed or deleted, the consumer reporting company is not permitted to put the disputed information back in your file unless the information provider verifies that it is accurate and complete. The consumer reporting company also must send you written notice that includes the name, address, and phone number of the information provider. If you ask, the consumer reporting company must send notices of any correction to anyone who received your report in the past six months. You also can ask that a corrected copy of your report be sent to anyone who received a copy during the past two years for employment purposes.
If an investigation doesn’t resolve your dispute with the consumer reporting company, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the consumer reporting company to provide your statement to anyone who received a copy of your report in the recent past. You can expect to pay for this service.
Step 2: Tell the creditor or other information provider, in writing, that you dispute an item. Be sure to include copies (NOT originals) of documents that support your position. Many providers specify an address for disputes. If the provider reports the item to a consumer reporting company, it must include a notice of your dispute. And if you are correct — that is, if the information is found to be inaccurate — the information provider may not report it again.
Reporting Accurate Negative Information
When negative information in your report is accurate, only the passage of time can assure its removal. A consumer reporting company can report most accurate negative information for seven years and bankruptcy information for 10 years. Information about an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. To calculate the seven-year reporting period, start from the date the event took place. There is no time limit on reporting information about criminal convictions; information reported in response to your application for a job that pays more than $75,000 a year; and information reported because you’ve applied for more than $150,000 worth of credit or life insurance.
The Credit Repair Organizations Act
Credit repair organizations must give you a copy of the “Consumer Credit File Rights Under State and Federal Law” before you sign a contract. They also must give you a written contract that spells out your rights and obligations. Read these documents before you sign anything. And before signing, know that a credit repair company cannot:
make false claims about their services
charge you until they have completed the promised services
perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees.
Before you sign a contract, be sure it specifies:
the payment terms for services, including the total cost
a detailed description of the services the company will perform
how long it will take to achieve the result
any guarantees the company offer
the company’s name and business address
Have You Been Victimized?
Many states have laws regulating credit repair companies. State law enforcement officials may be helpful if you’ve lost money to credit repair scams. Don’t be embarrassed to report a problem with a credit repair company. While you may fear that contacting the government could make your problems worse, remember that laws are in place to protect you. Contact your local consumer affairs office or your state Attorney General (AGs). Many AGs have toll-free consumer hotlines; check the Blue Pages of your telephone directory for the phone number or www.naag.org for a list of state attorneys general.
If You Need Help
Just because you have a poor credit report doesn’t mean you can’t get credit. Creditors set their own standards, and not all look at your credit history the same way. Some may look only at recent years to evaluate you for credit, and they may give you credit if your bill-paying history has improved. It may be worthwhile to contact creditors informally to discuss their credit standards.
If you’re not disciplined enough to create a workable budget and stick to it, to work out a repayment plan with your creditors, or to keep track of your mounting bills, you might consider contacting a credit counseling organization. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. But remember that “nonprofit” status doesn’t guarantee free, affordable, or even legitimate services. In fact, some credit counseling organizations — even some that claim non-profit status — may charge high fees or hide their fees by pressuring consumers to make “voluntary” contributions that only cause more debt.
Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.
If you are considering filing for bankruptcy, be aware that bankruptcy laws require that you get credit counseling from a government-approved organization within six months before you file for bankruptcy relief. You can find a state-by-state list of government-approved organizations at www.usdoj.gov/ust, the website of the U.S. Trustee Program. That’s the organization within the U.S. Department of Justice that supervises bankruptcy cases and trustees. Be wary of credit counseling organizations that say they are government-approved, but do not appear on the list of approved organizations.
Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting. Counselors discuss your entire financial situation with you, and can help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.
Do-It-Yourself Check-Up
Regardless of your credit history, financial advisors and consumer advocates recommend reviewing your credit report periodically for three important reasons:
The information in your credit report affects whether you can get a loan or insurance — and how much you will have to pay for it.
It’s important to make sure the information is accurate, complete, and up-to-date before you apply for a loan for a major purchase like a house or car, buy insurance, or apply for a job.
It can help you deter, detect and defend against identity theft. That’s when someone uses your personal information — like your name, your Social Security number, or your credit card number — to commit fraud. Identity thieves may use your information to open a new credit card account in your name. Then, when they don’t pay the bills, the delinquent account is reported on your credit report. Inaccurate information like that could affect your ability to get credit, insurance, or even a job.
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You see the advertisements in newspapers, on TV, and on the Internet. You hear them on the radio. You get fliers in the mail, and maybe even calls offering credit repair services. They all make the same claims:
“Credit problems? No problem!”
“We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!”
“We can erase your bad credit — 100% guaranteed.”
“Create a new credit identity — legally.”
The Federal Trade Commission (FTC) says do yourself a favor and save some money, too. Don’t believe these claims: they’re very likely signs of a scam. Indeed, attorneys at the nation’s consumer protection agency say they’ve never seen a legitimate credit repair operation making those claims. The fact is there’s no quick fix for creditworthiness. You can improve your credit report legitimately, but it takes time, a conscious effort, and sticking to a personal debt repayment plan.
Recognizing a Credit Repair Scam
Everyday, companies target consumers who have poor credit histories with promises to clean up their credit report so they can get a car loan, a home mortgage, insurance, or even a job once they pay them a fee for the service. The truth is, these companies can’t deliver an improved credit report for you using the tactics they promote. It’s illegal: No one can remove accurate negative information from your credit report. So after you pay them hundreds or thousands of dollars in fees, you’re left with the same credit report and someone else has your money.
If you see a credit repair offer, here’s how to tell if the company behind it is up to no good:
The company wants you to pay for credit repair services before they provide any services. Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised.
The company doesn’t tell you your rights and what you can do for yourself for free.
The company recommends that you do not contact any of the three major national credit reporting companies directly.
The company tells you they can get rid of most or all the negative credit information in your credit report, even if that information is accurate and current.
The company suggests that you try to invent a “new” credit identity — and then, a new credit report — by applying for an Employer Identification Number to use instead of your Social Security number.
The company advises you to dispute all the information in your credit report, regardless of its accuracy or timeliness.
If you follow illegal advice and commit fraud, you may find yourself in legal hot water, too: It’s a federal crime to lie on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses. You could be charged and prosecuted for mail or wire fraud if you use the mail, telephone, or Internet to apply for credit and provide false information.
Your Rights Regarding Credit Repair
No one can legally remove accurate and timely negative information from a credit report. The law allows you to ask for an investigation of information in your file that you dispute as inaccurate or incomplete. There is no charge for this. Some people hire a company to investigate on their behalf, but anything a credit repair clinic can do legally, you can do for yourself at little or no cost. According to the Fair Credit Reporting Act (FCRA):
You’re entitled to a free report if a company takes “adverse action” against you, like denying your application for credit, insurance, or employment. You have to ask for your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the consumer reporting company. You’re also entitled to one free report a year if you’re unemployed and plan to look for a job within 60 days; if you’re on welfare; or if your report is inaccurate because of fraud, including identity theft.
Each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — is required to provide you with a free copy of your credit report once every 12 months, if you ask for it. The three companies have a central website, a toll-free telephone number, and a mailing address for consumers to order the free annual credit reports the government entitles them to. To order, click on annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
You can use the form in this brochure, or you can print it from ftc.gov/credit. You may order reports from each of the three consumer reporting companies at the same time, or you can stagger your requests, ordering one from each company throughout the year from the central address. Don’t contact the three nationwide consumer reporting companies individually or at another address because you may end up paying for a report that you’re entitled to get for free. In fact, each consumer reporting company may charge you up to $10.50 to purchase an additional copy of your report within a 12-month period.
It doesn’t cost anything to dispute mistakes or outdated items on your credit report. Under the FCRA, both the consumer reporting company and the information provider (that is, the person, company, or organization that provides information about you to a consumer reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under the FCRA, contact the consumer reporting company and the information provider.
Helping Yourself
Step 1: Tell the consumer reporting company, in writing, what information you think is inaccurate. Include copies (NOT originals) of any documents that support your position. In addition to providing your complete name and address, your letter should identify each item in your report you dispute; state the facts and the reasons you dispute the information, and ask that it be removed or corrected. You may want to enclose a copy of your report, and circle the items in question. Send your letter by certified mail, “return receipt requested,” so you can document that the consumer reporting company received it. Keep copies of your dispute letter and enclosures.
Your letter may look something like the one below.
Sample Dispute Letter
Date
Your Name
Your Address,
City, State, Zip Code
Complaint Department
Name of Company
Address
City, State, Zip Code
Dear Sir or Madam:
I am writing to dispute the following information in my file. The items I dispute also are encircled on the attached copy of the report I received.
This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information.
Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please investigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.
Sincerely,
Your name
Enclosures: (List what you are enclosing.)
Consumer reporting companies must investigate the items you question within 30 days — unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the consumer reporting company, it is required to investigate, review the relevant information, and report the results back to the consumer reporting company. If this investigation reveals that the disputed information is inaccurate, the information provider has to notify the nationwide consumer reporting companies so they can correct it in your file.
When the investigation is complete, the consumer reporting company must give you the results in writing, too, and a free copy of your report if the dispute results in a change. If an item is changed or deleted, the consumer reporting company is not permitted to put the disputed information back in your file unless the information provider verifies that it is accurate and complete. The consumer reporting company also must send you written notice that includes the name, address, and phone number of the information provider. If you ask, the consumer reporting company must send notices of any correction to anyone who received your report in the past six months. You also can ask that a corrected copy of your report be sent to anyone who received a copy during the past two years for employment purposes.
If an investigation doesn’t resolve your dispute with the consumer reporting company, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the consumer reporting company to provide your statement to anyone who received a copy of your report in the recent past. You can expect to pay for this service.
Step 2: Tell the creditor or other information provider, in writing, that you dispute an item. Be sure to include copies (NOT originals) of documents that support your position. Many providers specify an address for disputes. If the provider reports the item to a consumer reporting company, it must include a notice of your dispute. And if you are correct — that is, if the information is found to be inaccurate — the information provider may not report it again.
Reporting Accurate Negative Information
When negative information in your report is accurate, only the passage of time can assure its removal. A consumer reporting company can report most accurate negative information for seven years and bankruptcy information for 10 years. Information about an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. To calculate the seven-year reporting period, start from the date the event took place. There is no time limit on reporting information about criminal convictions; information reported in response to your application for a job that pays more than $75,000 a year; and information reported because you’ve applied for more than $150,000 worth of credit or life insurance.
The Credit Repair Organizations Act
Credit repair organizations must give you a copy of the “Consumer Credit File Rights Under State and Federal Law” before you sign a contract. They also must give you a written contract that spells out your rights and obligations. Read these documents before you sign anything. And before signing, know that a credit repair company cannot:
make false claims about their services
charge you until they have completed the promised services
perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees.
Before you sign a contract, be sure it specifies:
the payment terms for services, including the total cost
a detailed description of the services the company will perform
how long it will take to achieve the result
any guarantees the company offer
the company’s name and business address
Have You Been Victimized?
Many states have laws regulating credit repair companies. State law enforcement officials may be helpful if you’ve lost money to credit repair scams. Don’t be embarrassed to report a problem with a credit repair company. While you may fear that contacting the government could make your problems worse, remember that laws are in place to protect you. Contact your local consumer affairs office or your state Attorney General (AGs). Many AGs have toll-free consumer hotlines; check the Blue Pages of your telephone directory for the phone number or www.naag.org for a list of state attorneys general.
If You Need Help
Just because you have a poor credit report doesn’t mean you can’t get credit. Creditors set their own standards, and not all look at your credit history the same way. Some may look only at recent years to evaluate you for credit, and they may give you credit if your bill-paying history has improved. It may be worthwhile to contact creditors informally to discuss their credit standards.
If you’re not disciplined enough to create a workable budget and stick to it, to work out a repayment plan with your creditors, or to keep track of your mounting bills, you might consider contacting a credit counseling organization. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. But remember that “nonprofit” status doesn’t guarantee free, affordable, or even legitimate services. In fact, some credit counseling organizations — even some that claim non-profit status — may charge high fees or hide their fees by pressuring consumers to make “voluntary” contributions that only cause more debt.
Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.
If you are considering filing for bankruptcy, be aware that bankruptcy laws require that you get credit counseling from a government-approved organization within six months before you file for bankruptcy relief. You can find a state-by-state list of government-approved organizations at www.usdoj.gov/ust, the website of the U.S. Trustee Program. That’s the organization within the U.S. Department of Justice that supervises bankruptcy cases and trustees. Be wary of credit counseling organizations that say they are government-approved, but do not appear on the list of approved organizations.
Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting. Counselors discuss your entire financial situation with you, and can help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.
Do-It-Yourself Check-Up
Regardless of your credit history, financial advisors and consumer advocates recommend reviewing your credit report periodically for three important reasons:
The information in your credit report affects whether you can get a loan or insurance — and how much you will have to pay for it.
It’s important to make sure the information is accurate, complete, and up-to-date before you apply for a loan for a major purchase like a house or car, buy insurance, or apply for a job.
It can help you deter, detect and defend against identity theft. That’s when someone uses your personal information — like your name, your Social Security number, or your credit card number — to commit fraud. Identity thieves may use your information to open a new credit card account in your name. Then, when they don’t pay the bills, the delinquent account is reported on your credit report. Inaccurate information like that could affect your ability to get credit, insurance, or even a job.
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tax lien info
Buying Tax Lien Certificates Without Leaving Your Home
Perhaps you live in a tax deed state, or, for whatever reason, you just can't make it to any tax lien sales. No worries, you can still be a tax lien investor from the comfort of your own home. This is made possible through over-the-counter sales or assignment purchases. Most states have a system in place to sell the tax lien certificates that are left over after the annual tax sale.
This is a great opportunity for you to invest your money all over the country without ever having to travel to the actual location in which you are investing. With over-the-counter tax lien certificates, you are getting the best of both worlds: the bidding competition is eliminated so you will get the maximum interest rate, and you are buying these liens at the lowest possible price. In fact, in some cases, you may get a tax lien certificate for less than the minimum bid price that it was offered at the auction.
In order to get started, you will need to know each county's process for selling properties in their inventory after the tax sale, and how to get a list of these properties. Many counties require that you send an "Assignment Purchase" form letter or another type of application form letting the county know who you are and what information you are looking for. Some county Web sites will list the county's post tax sales process, and some states even allow you to download current property inventory lists for free. The cost of assignment purchase lists in other counties can vary anywhere from $2 to about $25.
Calling a county directly for information is not always the best strategy. You won't always be able to reach the person (such as the County Treasurer or Tax Collector) you need to talk to, and the person you do talk to is not guaranteed to provide the answers you are looking for. By sending a formal letter instead, it is more likely than you will get complete, accurate information from the correct person.
Buying tax liens over the counter gives you a tremendous opportunity to reduce, or even eliminate the redemption period. In many situations, the properties have been in county inventory for a lengthy amount of time and are approaching, or even past the redemption period. This means that you will be able to foreclose on the property immediately or much sooner than if you had purchased the lien at an auction.
So, with this investing strategy, the tax lien certificate investor has the following advantages:
you buy the tax lien certificate at the lowest possible price, sometimes even lower than the original minimum bid;
you get the highest possible interest rate;
you don't have to wait for an auction to start investing your money;
you can invest when it is convenient for you, or when you have the capital available;
you can spend as much time as you need to research the properties you are interested in, and won't feel rushed because a sale is coming up.
Finally, something else to keep in mind -- just because a property didn't sell at the tax lien auction, it doesn't mean that the properties on the assignment purchase lists are not worth looking at. There are almost always a few gems to be found, and it is definitely worth trying to find these gems.
Are you looking for a better way to invest your money in 2009 and beyond? Or maybe you are just looking to make a little (or a lot) of extra money on the side? Then, you owe it to yourself to find out more about tax lien and tax deed investing.
If you've heard about what a great investment tax liens and tax deeds are, but you just haven't done anything about it because you don't know where to begin,
google418ad8a895891a4e.html
Perhaps you live in a tax deed state, or, for whatever reason, you just can't make it to any tax lien sales. No worries, you can still be a tax lien investor from the comfort of your own home. This is made possible through over-the-counter sales or assignment purchases. Most states have a system in place to sell the tax lien certificates that are left over after the annual tax sale.
This is a great opportunity for you to invest your money all over the country without ever having to travel to the actual location in which you are investing. With over-the-counter tax lien certificates, you are getting the best of both worlds: the bidding competition is eliminated so you will get the maximum interest rate, and you are buying these liens at the lowest possible price. In fact, in some cases, you may get a tax lien certificate for less than the minimum bid price that it was offered at the auction.
In order to get started, you will need to know each county's process for selling properties in their inventory after the tax sale, and how to get a list of these properties. Many counties require that you send an "Assignment Purchase" form letter or another type of application form letting the county know who you are and what information you are looking for. Some county Web sites will list the county's post tax sales process, and some states even allow you to download current property inventory lists for free. The cost of assignment purchase lists in other counties can vary anywhere from $2 to about $25.
Calling a county directly for information is not always the best strategy. You won't always be able to reach the person (such as the County Treasurer or Tax Collector) you need to talk to, and the person you do talk to is not guaranteed to provide the answers you are looking for. By sending a formal letter instead, it is more likely than you will get complete, accurate information from the correct person.
Buying tax liens over the counter gives you a tremendous opportunity to reduce, or even eliminate the redemption period. In many situations, the properties have been in county inventory for a lengthy amount of time and are approaching, or even past the redemption period. This means that you will be able to foreclose on the property immediately or much sooner than if you had purchased the lien at an auction.
So, with this investing strategy, the tax lien certificate investor has the following advantages:
you buy the tax lien certificate at the lowest possible price, sometimes even lower than the original minimum bid;
you get the highest possible interest rate;
you don't have to wait for an auction to start investing your money;
you can invest when it is convenient for you, or when you have the capital available;
you can spend as much time as you need to research the properties you are interested in, and won't feel rushed because a sale is coming up.
Finally, something else to keep in mind -- just because a property didn't sell at the tax lien auction, it doesn't mean that the properties on the assignment purchase lists are not worth looking at. There are almost always a few gems to be found, and it is definitely worth trying to find these gems.
Are you looking for a better way to invest your money in 2009 and beyond? Or maybe you are just looking to make a little (or a lot) of extra money on the side? Then, you owe it to yourself to find out more about tax lien and tax deed investing.
If you've heard about what a great investment tax liens and tax deeds are, but you just haven't done anything about it because you don't know where to begin,
google418ad8a895891a4e.html
Monday, August 24, 2009
STUDENT LOAN CONSOLIDATION
A Consolidation Loan allows you to combine one or more of your federal education loans into a new loan that offers you several advantages such as one monthly payment, flexible repayment options, and reduced monthly payments.
Here is a website called loanconsolidation.ed.gov
Here is a website called loanconsolidation.ed.gov
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