INCOME BONDS, bonds bearing a stipulated interest rate but upon which no interest is paid unless there is sufficient in come for this purpose after all other fixed charges have been met. The non-payment of interest on an income bond when the earn ings are not sufficient for this purpose does not constitute a default and does not give the bondholder the right to sue. Income bonds are almost invariably brought about during reorganizations of businesses, whereupon they may be accepted by holders of old defaulted bonds or offered for sale to the general public to raise cash. Income bonds may be secured as to principal by a mortgage, in which case the mortgage would be junior to the others ; or by collateral; or may be strictly of the debenture type. The interest may be either cumulative or non-cumulative. It is usually the practice to use available income to pay a portion of the interest if there is not enough to pay the full rate. Owing to the uncertainty of interest payments income bonds generally rank very low as investments and are usually regarded as just above the preferred stock of the corporation. They are often bought at a low price by unprincipled persons and sold at par or above to uninformed buyers upon the false representation that the name "income bonds" means bonds upon which an income is guaranteed, than which nothing could be further from the truth.