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| Will filing bankruptcy eliminate all my debts? |
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Examples of debt not discharged:
* Alimony and child support
* Education Loans
* Tax debts
* New purchases owed that are more than $1,000 for luxury goods or services.
* New cash advances that are more than $1,000
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| Can I be sued? |
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Yes. Your creditors have the right to sue to recover their money. the purpose of a lawsuit is to force a settlement on the matter. That's why legal representation is so important. Our lawyers practice in all 50 states. |
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| What is bankruptcy? |
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Bankruptcy is a proceeding in a federal court in which an insolvent debtor’s assets are liquidated and the debtor is relieved of further liability. Chapter 7 of the Bankruptcy Reform Act deals with liquidation, while Chapter 13 deals
with reorganization. |
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| Is this the same as a “Consumer Credit Counseling Service?” |
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No. Most consumer credit counseling programs are considered Chapter 13 Bankruptcy where the creditor takes less interest, but you still agree to pay back all the money in a 3 to 5 year period. Even after you pay this debt back,
it will continue to show on your credit report for up to 10 years! |
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| Who is best suited for our program? |
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Our program is designed for people who feel frustrated and trapped by their current debt problem and who need a simple and quick way to find financial stability. Typically our clients will fall into 2 categories: those who are struggling to meet their current monthly payments, and those who are frustrated because they make payments but don’t lower their principle balance. |
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| How long does it take to become debt free? |
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Our average client will be debt-free in about 2 years. Of course, the length of your individual program will depend on how much money you can apply to your debts each month. |
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| How will this affect my credit? |
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It depends. If you have no history of late payments to date, our debt settlement process will initially have a negative effect on your credit rating. However, reducing your debt using our program will improve the portion of your credit rating that considers debt to income ratio. As you pay off each creditor, your credit score will go up, settling for 25 to 50 percent of the original balance. Only you will know that you have paid your debt at a fraction of its value! |
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| Will my accounts be closed? |
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Yes. Each account we include in our program will be closed. |
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| Do I have to include all my debts? |
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No. You can pick and choose which creditors you want included in our program. |
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| What types of debt do you accept? |
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We accept all unsecured debts, and debts that are not tied to specific collateral |
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| What do I do if a creditor calls? |
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Simply let them know that you are a client of Law Office of Emilio N Francisco and refer them to our creditor hot line. |
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| Is my information confidential? |
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Yes. You can rest assured that we keep all information absolutely confidential. |
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| What are the different types of bankruptcy? |
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Bankruptcy can be described as a "liquidation" or "reorganization." Most consumers will file a Chapter 7 or Chapter 13.
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"Liquidation" bankruptcy is called Chapter 7 and is the most common filing. In a Chapter 7 bankruptcy, a consumer or business asks the bankruptcy court to discharge all of the debts they owe. Some debts cannot be discharged. (See Non dischargeable Debts question.) In exchange for the discharge of debts, the business' assets or consumer's nonexempt property is sold (or "liquidated"). The proceeds are used to pay off the creditors. Individuals filing for Chapter 7 usually have severe debt problems with large credit card and other secured and
unsecured debt. They typically do not own a lot of assets, which can be liquidated and therefore do not have as much to lose.
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There are several types of "reorganization" bankruptcy: Chapter 11, Chapter 12, and Chapter 13. Consumers with secured debts under $871,550 and unsecured debts under $269,250 can file for Chapter 13. The main difference between Chapter 13 and Chapter 7 is Chapter 13 enables a debtor to retain certain assets that would otherwise be liquidated in Chapter 7. In most cases, you can keep your home and car under either plan (provided your equity does not exceed certain limits). Under Chapter 7, however, you won't be able to keep rental properties, antique collections, etc. which you can retain under Chapter 13. A Chapter 12 is for family farmers.
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Family farmers can file for Chapter 12. Consumers with debts in excess of the Chapter 13 debt limits and businesses can file Chapter 11—a time-consuming and expensive process. In any reorganization bankruptcy, you file a plan with the bankruptcy court proposing how you plan to repay your creditors. Some debts must be repaid in full, some are partially repaid, and others aren't paid at all. Some debts must be paid with interest, some are paid at the beginning, and some at the end. |
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| Why would I file Chapter 13 instead of Chapter 7? |
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A chapter 13 bankruptcy is normally for people with too much income to file a chapter 7 or for those who have a lot of non dischargeable property. Chapter 13 bankruptcy is for consumers or small businesses who want to repay their creditors while protecting their real estate and personal property and avoiding harassing collections efforts. You cannot file a Chapter 7 if you have filed a 7 or 13 within the past 8 years (unless you paid off at least 70% of your unsecured debts in a previous 13 filing). However, you can file for Chapter 13 at any time. A trustee would propose a 3- to 5-year plan to creditors where the debtor would repay part of his debts out of future income. The trustee calculates how much you can afford to pay each month after considering your living expenses, income, and disposable income. At the end of the plan's period, you would no longer be liable for your debts.
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In a Chapter 13, you end up paying back a percentage of your debts, and in some cases, the entire amount. If a payment is missed you could be forced to pay the whole debt back. A Chapter 13 doesn't stay on your credit report as long as a Chapter 7, and there are some debts that can be discharged in a 13 that can't be discharged in a 7. The main problem with chapter 13 is that in some cases you could end up paying back 50% or more of the debt, in some states the entire amount of the debt, and forced by the courts to make the payments. If you then miss a payment, you could end up in breach of court and forced to pay the whole debt. You can stop the collection efforts using chapter 13, but why would you want to tie yourself into making payments by the courts? |
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| Who is eligible for a bankruptcy? |
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In order to be eligible to file a Chapter 7, you must not have been granted a Chapter 7 bankruptcy within the last 8 years or have completed a Chapter 13. You also must not have had a bankruptcy filing dismissed for cause within the last 6 months. If after paying all of your necessary monthly expenses, there is not enough money to pay your remaining monthly debts, then Chapter 7 may be an option. |
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| How negatively will a bankruptcy affect me? |
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Bankruptcy should be considered only as a last resort. Why? Bankruptcy will stay on your credit report for up to 10 years. However, it will actually remain on your court records for 20 years. In other instances, it will follow you for the rest of your life. For example, if you apply for a loan, job, insurance, or other items, you may very well be asked "have you ever filed for bankruptcy?" This can negatively impact your future employment and carries with it a negative stigma.
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Credit companies also do not look favorably on people that have used bankruptcy as a means of solving their debt problem. The credit card offers you'll receive will carry with them a "higher risk" interest rate than had you
not filed. While bankruptcy may help you eliminate your debt, its negative affects on your credit, emotions, court records, and self-esteem may last much longer than 10 years. |
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| Will filing for bankruptcy stop harassing phone calls from collectors? |
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When you file bankruptcy, something called an "automatic stay" goes into effect. After you file, the court notifies all creditors listed in your schedules. This stops virtually all creditors from taking action to collect the debts you
owe them unless the bankruptcy court lifts the stay and lets the creditor proceed with collections. |
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| What generally happens in consumer bankruptcy cases? |
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In a Chapter 7 bankruptcy filing, you file several forms with the bankruptcy court that list income, expenses, assets, debts and property transactions for the past two years. The cost to file is $299, which may be waived for people who receive public assistance or live below the poverty level. A court-appointed trustee is assigned to oversee the case. A month after filing, you must attend a meeting of creditors where the trustee reviews your forms and asks questions. If you have any nonexempt property, you must give it (or its value in cash) to the trustee. In 3 to 6 months, you will receive a notice from the court that "all debts that qualified for discharge are discharged."
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Chapter 13 differs slightly. You file the same forms along with a proposed repayment plan. Here you describe how you plan on repaying your debts over the next 3 to 5 years. The cost to file is $185, and a trustee is assigned to oversee the case. You attend the meeting of creditors. Often 1 or 2 creditors attend this meeting, especially if they don't like your plan. After the meeting, you attend a hearing and the bankruptcy judge either approves or denies your plan. If confirmed, and you make all the payments, you may receive a discharge of any balance owed at the end of the case. |
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| What debts are not dischargeable? |
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A common misconception is that by filing bankruptcy all your debts will be discharged, leaving you debt free There are many debts that are not dischargeable and that you will still be responsible for after the bankruptcy.
These include: taxes, spouse and child support, debts arising from willful misconduct and or malicious misconduct by the debtor, liability from driving while intoxicated, non dischargeable debts from a previous bankruptcy, student loans, and debts due to fraud or criminal activities. Certain luxury purchases and cash advances over $1,000 are non dischargeable within 60 days of the bankruptcy filing. |
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| What property could I lose if I file bankruptcy? |
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You won't lose property in Chapter 13. In Chapter 7, you select to keep from a list of state exemptions or exemptions provided in the federal Bankruptcy Code. Exemptions may include: equity in your home, covered under the homestead exemption, insurance, some pensions, personal property (up to $1,000 in jewelry or vehicles with more than $2,400 in equity), public benefits like welfare, Social Security, and unemployment insurance, tools used in your job, and at least 75% of earned but unpaid wages. |
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| Will I lose my house or apartment? |
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While bankruptcy is not designed to take away your home, there are a few situations where you can lose your home. If you are behind on your mortgage payments, you will almost certainly lose your house if you file a Chapter 7.
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In a Chapter 13 bankruptcy, you will not lose your house if you immediately resume making the regular payments called for under your agreement and repay your missed mortgage payments through your plan. In Chapter 7 bankruptcy, whether or not you will lose your house depends on the amount of equity you have in the property and the amount of any homestead exemption (which varies state-to-state). If the total amount of debt against your house is less than the market value, you may lose your house unless a homestead exemption protects you.
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If you are current on your rent payments and file for bankruptcy, it's unlikely your landlord will know. But if you are behind on your rent, it's likely your landlord will attempt to evict you. |
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| Will the fact that I filed bankruptcy appear on credit reports? |
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Bankruptcy is treated as a judgment and will be listed in credit reports for a period of up to 10 years. Bankruptcy is also a matter of public record, and can remain there for up to 20 years, following you as you apply for jobs, housing,
and even insurance policies. |
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| How do I apply for your program? |
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The first step is to complete the short form by clicking HERE. You will then be contacted by us within 24 hours. |
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| Who qualifies for our program? |
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The Debt Reduction Law Center’s Debt Settlement program is ONLY for people facing financial hardship. This means people who are late on paying their debts, have little or no ability to pay their debts in the future, and are facing a
possible bankruptcy as their only other option. Examples of qualifying hardships are a loss of income, medical emergency, death of a household member who provided financial assistance, or a divorce. If you are currently meeting your monthly debt obligations and are able to continue to do so, then our Debt Settlement program is NOT for you. |
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| Who is NOT qualified for our program? |
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The Debt Reduction Law Center NEVER advocates that any person default on their debts. This program is not designed to negotiate debts for people who have reasonable means to pay off their debts. If you can pay your debts in
the usual fashion, by making minimum payments, then you should honor your debts, and do so. This program is NOT for people who are gainfully employed, have high credit ratings, and can meet their monthly debt obligations. |
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| Is bankruptcy a better option for me? |
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Anyone considering our program should also consult a bankruptcy attorney and determine if the situation warrants a filing for bankruptcy. Using the Debt Settlement process does not guarantee that you will not have to file for bankruptcy in the future. |
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| Can I still use my credit cards? |
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NO. All credit cards in the program should not be used. Any cards you DO NOT put into the program should not be used,unless there is an emergency. This program is for you to get out of debt, not get further into debt. |
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| What will I pay for your services? |
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The Debt Reduction Law Center’s Debt Settlement program requires a retainer fee of 10% of the amount of debt that you bring into our program, and 15% of the amount we save you. Here’s an example: say you have $15,000 worth of debt.your 10% retainer would be $1,500. Your $15,000 is settled for $6,000, saving you $9,000. Your fee would be 15% of that$9,000, or $1,350. All this is calculated into your monthly payment that our highly qualified consultants will quote to you. There are NO OUT OF POCKET COSTS. |
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| Does Debt Settlement have a negative impact on my credit? |
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YES. Your credit score will decline due to entering any Debt Settlement program. How much it will decline depends on your original circumstances. Most of the accounts you place into negotiation are likely to be “charged off” , which will reflect negatively on your credit. However, once our legal team has settled this debt, it is reported to the credit bureau as balance zero, paid in full. This reflects positively on your credit report. After we settle all your debts, your credit will improve significantly. |
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| Can DRLC stop my creditors from calling and harrassing me? |
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NO. Your creditors have the right to try to contact you, in order to collect. However, we have been very successful in eliminating most harassing telephone calls. If your account is in collections, however, collections agencies have to adhere to the Fair Debt Collection Practices Guidelines. If you would like to learn more, click here. |
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| Does DRLC repair my credit? |
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NO. The Debt Reduction Law Center does not engage in credit repair services. No company can remove legitimate negative items from your credit report. Those negative items will remain there, in accordance with the conditions imposedby the credit reporting agencies. Remember, the goal is to settle your delinquent accounts. A settled account is far better than a delinquent one. |
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| Can creditors garnish my wages? |
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YES. But this would be a long and costly process for them. First, they have to sue you, get a successful judgement, and then file for a garnishment. If you are willing to work with your creditors, wage garnishment can usually be avoided. |
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| Can’t I negotiate with my creditors on my own? |
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YOU CAN. However, this process would be a long and complex one for the average consumer. Our legal team are experts in how creditors negotiate, with over 31 years experience, getting the largest debt reductions. |
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| What are the tax consequences? |
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Your creditors will report any cancelled or settled debts exceeding $600 to the IRS, and you will be required to reportthis as income on your annual tax return. The IRS does permit you to write off any “income” from canceled debts up to
the amount which was discharged...The Debt Reduction Law Center recommends that you consult with your tax advisor for advice in how this will apply to your situation. |
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