We've investigated your situation, and you don't qualify to file bankruptcy.
Chicago, IL (PRWEB) January 11, 2007
Collection agencies have a bad reputation, and many have earned it: the Federal Trade Commission received 66,627 complaints against debt collectors in 2005. Unfortunately, the publicity surrounding the new bankruptcy law that took effect in October of 2005 gave dishonest debt collectors a new weapon, and many are using it to trick consumers. Some unscrupulous debt collectors are telling debtors that they're no longer eligible to file bankruptcy, or that certain types of debt can no longer be included in a bankruptcy filing. In many cases, these claims are outright lies. To help consumers understand their rights and protect against these and other dishonest debt collection tactics, Total Bankruptcy has launched a new section on its website at http://www.TotalBankruptcy.com. The section provides information about the Fair Debt Collection Practices Act and other consumer protection statutes, and reports on the debt collection companies that are the subject of Federal Trade Commission or state consumer protection division actions.
The confusion and panic surrounding the new bankruptcy law that took effect in October of 2005 left a lot of people with the mistaken idea that they could no longer file for bankruptcy protection. Before the dust had fully settled, unscrupulous debt collectors and debt purchasing companies had found a way to turn those fears and confusions to their advantage: By lying to consumers about their bankruptcy rights.
Working with bankruptcy lawyers across the country, Total Bankruptcy has been hearing an increasing number of reports of consumers victimized by these practices. In an effort to help educate consumers and give them the tools and information to protect themselves against dishonest debt collector practices, Total Bankruptcy has added a new section to its website where consumers can find information about their rights under the Fair Debt Collection Practices Act and other consumer protection statutes, and learn about some of the latest Federal Trade Commission (FTC) and state actions against debt collectors and debt purchasers.
Debt collector lies about bankruptcy usually come in two flavors:
DEBT COLLECTOR LIE # 1: "We've investigated your situation, and you don't qualify to file bankruptcy."
The idea is to make the debtor feel like he's without options, and the media coverage of the 2005 bankruptcy reforms have made this an easy sell. Most people already have a vague (inaccurate) idea that the new bankruptcy laws have disqualified a lot of people from filing, so this lie sounds like the truth.
THE TRUTH: Debt collectors don't have enough information to know whether or not the person on the other end of the phone "qualifies for bankruptcy".
The Chapter 7 means test is a complex calculation involving income, the median income in the debtor's state, and expenses based on a combination of IRS, local, and actual numbers. Reports from U.S. Trustee certified Credit Counseling agencies show that more than 96% of the people who come to them considering bankruptcy qualify for Chapter 7 bankruptcy, and even those few who don't can likely file under Chapter 13.
DEBT COLLECTOR LIE # 2: "You can't file bankruptcy on that kind of debt anymore."
This lie serves two purposes: To convince the debtor that he's stuck with this debt, and to make this debt a priority. Maybe he can file bankruptcy on some of his debts, but not this one, so he'd better give it special attention.
THE TRUTH: Most debt collection calls relate to credit card and other unsecured debt, nearly all of which is dischargeable in bankruptcy.
Credit card debt is still dischargeable in bankruptcy. Medical bills are still dischargeable in bankruptcy. Deficiency judgments relating to repossessions or mortgage foreclosures are still dischargeable in bankruptcy. Even in the rare circumstances that a debt isn't dischargeable, you may still be able to include that debt in a Chapter 13 bankruptcy plan and pay it off over time.
Debt collectors, who stand to make money by lying to consumers and to lose money when consumers exercise their bankruptcy options, are not a good source of information about bankruptcy law and options. The best source of information about bankruptcy is a local bankruptcy attorney. Consumers can also take advantage of the extensive general information about Chapter 7 bankruptcy, Chapter 13 bankruptcy, debt collection practices, dischargeable debts, and more at http://www.TotalBankruptcy.com.
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