The confusing and outdated laws that drive some sectors of the financial and legal world have never been so frustrating. Local governments, stooping to a new low, are now seizing property from homeowners over tax debt as low as $400! It’s a shocking move that has more than a few consumer protection agencies up in arms!
What You Should Do
The Associated Press reports that outdated state laws are allowing local governments to file tax liens against property owners who have outstanding tax debt as low as $400. If that debt remains unpaid (which it often does because of poor communication and misunderstandings), then that tax lien can be sold to banks and investors.
While the banks and investors who purchase the tax lien don’t actually own the house, they do own the right to seize the home later on. The homeowner has the ability to purchase the lien, but the fees and interest make the lien expensive.
If the owner doesn’t purchase the lien, the lien-holder can then sell the home at a huge profit margin! This technically-legal but highly unethical behavior is taking advantage of hard-working homeowners’ small tax debts. Some are saying that this new practice is even worse than foreclosure because it’s so unexpected.
Furthermore, because these homeowners could be current with their mortgage payments and not struggling with foreclosure, the shock of a small tax debt coming back to haunt them can be quite frightening! Make sure to check your tax debt records and insure that you are staying current.