I imagine the correct way to get the money back, if its spent or the heirs refuse, is to sue the estate similar to any other debtor.

ie always forgive debt or let the tenant slide. 

by the boat load. you can get a 10k credit card judgement that is a few years old and the credit card company deems it uncollectable and they will sell it for 50 to 100 bucks.. then their business model is to track these and at about 9.5 years by the time the debtor thinks they are home free .. they go into skip tracing mode figure out where they work and bank if they can and garnish them and take all the money out of their accounts.. 

I long for a return to the day of debtors prison.

I am really at a loss as to weather I should take all the money and pay off debt and be debt free, or pay off half the debt and invest the other half making money on it and use that to pay down debt or Use all the money for investments and try to gain as much leverage with it as possible using it to pay off debt.

@Joseph Charles - Debt or leverage is the beauty of real estate.

My girlfriend and I recently purchased our first home (I planned to house hack but honestly couldn't find a good multifamily in the area for our current price range due to time constraints of saving for our down payme...

@Chris Seveney under CFDs you state "Most states borrower defaults property reverts back to lender", but a contract for deed means that YOU already own the home and just have a contract to hand over the deed to your debtor once he/she completes the obligation.  

You have the ability to cash out on investment properties as well to pay off other debt, or to use as a down payment, for more purchases.

The lien gets released from the house, of course the actual debtor still owes the money.