Expert: Terry Leeders - 11/6/2011

Question
I am wondering if I get a tax lien and the sity goes bankrupt, what will happen to the money I am owed?  Thanks

Answer
Are you owed taxes?   Or do you owe taxes?

Debts owed to a city are still collectible, businesses file under the municipality bankruptcy code and these would be assets owed to the city, that obligation would not change if the city files bankruptcy.

If the city owes you money, then you would get a proof of claim form to file with the bankruptcy court, so that you can participate in the restructuring plan and would be placed into a certain class based on the type of debt this is.   The plan would set out which classes of debts get what funds, and the city will pay these accordingly.   

You mentioned a tax lien, any legal lien you have against an asset would remain, the bankruptcy should have no impact on that.  

As always, this is just general information and not legal advice.  if the city actually files bankruptcy, you should seek out and hire a local attorney to advise you of your rights and help you take the right steps to protect your claim.  

Thanks for your question, good luck.