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What is bankruptcy?
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 11 deals with reorganization.
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Will the fact that
I filed bankruptcy appear on credit reports?
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 in a person's
court records for up to
20 years. This may follow you as you apply for employment and even
insurance because you would have to answer the question : Have
you ever filed for, or completed a bankruptcy in the past?
A common misconception is that by filing bankruptcy all your
debts will be discharged, leaving you debt free…
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Will filing bankruptcy
eliminate all my debts?
Bankruptcy does not necessarily eliminate all debts, and often
simply restructures existing debts – this leaves you responsible
for all future payments.
Examples of debt not discharged:
- Alimony and child support
- Student and 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
- The list goes on……
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Who is best suited for
our program?
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. Our best results come from individuals that have a
financial hardship such as medical bills, loss of job, loss
of spouse, etc..
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Are there tax implications
for settling my debts?
There may be tax implications for settling your debts. We are
not accountants, and do not offer tax advice. However, our experience
has shown that with some of our clients, creditors have issued
a 1099 tax form showing the amount that has been eliminated
as taxable income. Of course, it is still advantageous to pay
less for your debt, but we feel it important to note all of
the factors to consider before entering into a program. We suggest
speaking with your tax advisor for more information.
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How will this
affect my credit?
It depends. Although Liberty Debt Management™ works with
your creditors to preserve the integrity of your credit history,
our debt settlement process will most likely have a negative
effect on your credit rating. As you pay off each creditor,
the benefits of our program may outweigh the negative effects,
settling typically in the range from 25-65 percent of the original
balance. Our goal is for you to resolve all of your unsecured
debt so you are no longer trapped by making endless payments
on your credit cards or need to file bankruptcy. We do not offer
credit advice. Make sure that any professional company you speak
with offering credit advice or soliciting credit repair abides
by the Credit Repair Organizations Act. Our personal position
is to be leery of any company alleging that they can improve
your credit score.
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What
do I do if a creditor calls?
Simply let them know that you are a client of Liberty Debt
Management and refer them to our creditor hot line.
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What types of debt
do you accept?
We accept all unsecured debts – that is, and we also
accept debts that are not tied to specific collateral (such
as a car or a house). A few of the most common examples include
credit cards, store cards, gas cards, medical bills, lines of
credit, signature loans, cell phone bills, and more. There are
some debts that do not qualify. Speak with one of our settlement
specialists to find out more information.
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Do I have to
include all my debts?
No. You can pick and choose which creditors you want included
in our program. We are committed to helping each of our customers
become completely debt free and encourage that you carefully
consider whether or not to include every card in the program.
Sometimes people who enroll into our program prefer to keep
one card for travel or emergency purposes.
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Will my accounts
be closed?
Yes. Each account you include in our program will be closed
by the credit card company.
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Is
my information confidential?
Yes. You can rest assured that we keep all information absolutely
confidential and that we do not share any information with any
third party not directly involved with your program.
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How long does
it take to become debt free?
Our average client will be debt-free in an average time frame
of about 3 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 do I apply
for your program?
The first step is to complete our consultation
request form. You will then be contacted by Liberty Debt
Management within 24 hours.
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Many people think filing bankruptcy is the easiest way out.
Actually, you should avoid bankruptcy at all costs. Filing
bankruptcy is the worst thing you can do to your credit. A
bankruptcy can stay on your credit report up to ten years from the
day of filing bankruptcy. Credit grantors will consider your
bankruptcy when evaluating you for a personal loan. You may receive
credit but only if a predetermined amount of time has passed, or the
bankruptcy is no longer on your credit report. Attaining a loan
after filing bankruptcy is difficult and could cost you more in
interest rates and fees.
There are two categories of bankruptcy: reorganization (chapter
11 bankruptcy , chapter 12 bankruptcy, and chapter 13 bankruptcy)
and liquidation (chapter 7 bankruptcy). In a chapter 7 bankruptcy, a
trustee collects your non-exempt property, sells it, and distributes
the proceeds to your creditors. You may use future earnings to pay
creditors in a chapter 11 bankruptcy, chapter 12 bankruptcy, or
chapter 13 bankruptcy. There are differences between filing a
chapter 13 bankruptcy and a Chapter 7 bankruptcy. Chapter 13
bankruptcy enables a debtor to retain certain assets that would
otherwise be liquidated in Chapter 7 bankruptcy.
Filing bankruptcy begins by filing a petition in Federal
bankruptcy court. You must file a statement of assets and
liabilities as well as schedules listing creditors. Once you have
finished filing bankruptcy, your creditors are prohibited from
taking any action to collect discharged debts.
There are other negatives when filing bankruptcy. In chapter 13
bankruptcy you may end up paying back 50% or more. If you miss a
payment during chapter 13 bankruptcy you could end up in breach of
court and forced to pay all the debt. Filing bankruptcy limits your
personal spending to items that the court considers essential. Also,
the majority of debtors don't complete their chapter 13 bankruptcy
repayment plans. Although most people filing chapter 13 bankruptcy
assume they'll complete their plan, only about one third do. A
chapter 7 bankruptcy may stay on your credit longer than a chapter
13 bankruptcy. Here you would be paying nothing back to your
creditors. If you own a home with significant equity, have assets to
protect, or have co-signers to a loan, you probably cannot file
chapter 7 bankruptcy. If passed, recent bankruptcy law proposals
will make filing bankruptcy even more difficult.
In some cases filing bankruptcy may be necessary. However, you
should avoid bankruptcy if at all possible. A competent debt
reduction company can help reduce your debts to an affordable level
so you can avoid bankruptcy. CLICK HERE for a free consultation from
The Debt Reduction Group. For more information on bankruptcy you may
want to contact a bankruptcy attorney in your area or search online.
Bankruptcy FAQ’s
Avoid Bankruptcy - Eliminate
Debt! CLICK HERE for a Free
Consultation!
What is bankruptcy?
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 11 deals with reorganization.
Avoid bankruptcy by reducing your debt.
Apply for a free debt counseling
consultation from a Personal Debt Consultant.
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What are the
different types of bankruptcy?
Bankruptcy can be described as a "liquidation" or
"reorganization." Most consumers will file a Chapter 7 or
Chapter 13.
"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 are 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.
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.
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.
Avoid bankruptcy by reducing your debt.
Apply for a free debt counseling
consultation from a Personal Debt Consultant.
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Why would I file Chapter 13
instead of Chapter 7?
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 6 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 3-5 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.
In a Chapter 13 you end up paying back at least 50% 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?
Avoid bankruptcy by reducing your debt.
Apply for a free debt counseling
consultation from a Personal Debt Consultant.
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Who is eligible for a
bankruptcy?
In order to be eligible to file a Chapter 7 you must not have
been granted a Chapter 7 bankruptcy within the last 6 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.
Avoid bankruptcy by reducing your debt.
Apply for a free debt counseling
consultation from a Personal Debt Consultant.
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How
negatively will a bankruptcy affect me?
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.
\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.
Avoid bankruptcy by reducing your debt.
Apply for a free debt counseling
consultation from a Personal Debt Consultant.
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Will filing
for bankruptcy stop harassing phone calls from collectors?
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.
Avoid bankruptcy by reducing your debt.
Apply for a free debt counseling
consultation from a Personal Debt Consultant.
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What generally happens in consumer bankruptcy cases?
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 $200, 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. Three to six months later, you will receive a notice
from the court that "all debts that qualified for discharge were
discharged."
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 three to five years. The
cost to file is $185 and a trustee is assigned to oversee the
case. You attend the meeting of creditors. Often one or two
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.
Avoid bankruptcy by reducing your debt.
Apply for a free debt counseling
consultation from a Personal Debt Consultant.
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What
debts are not dischargeable?
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.
Avoid bankruptcy by reducing your debt.
Apply for a free debt counseling
consultation from a Personal Debt Consultant.
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What
property could I lose if I file bankruptcy?
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; at least 75% of earned but
unpaid wages.
Avoid bankruptcy by reducing your debt.
Apply for a free debt counseling
consultation from a Personal Debt Consultant.
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Will I lose my
house or apartment?
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. 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.
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.
Avoid bankruptcy by reducing your debt.
Apply for a free debt counseling
consultation from a Personal Debt Consultant.
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