Debt Settlement and Bankruptcy FAQ

Debt Settlement FAQ

1. Q. When does My Attorney begin settling my debt?

A. The most important element to the success of our representation is YOU! Upon retaining Debt Pro Law Center, you will be provided with your own client trust account within which you are required to accumulate settlement funds. Amounts to be deposited into your client trust account are determined on a case by case basis. As funds begin to accumulate, the firm will assess your accounts and initiate settlement discussions with your creditors based on funds available in your trust account relative to your credit card account balances. All settlement proposals are reviewed with you by our offices. Final authorization to resolve an account must be extended by you.

2. Q. If I miss a monthly payment, will I be dropped from the program?

A. No. Simply call our office and we will arrange payment over the phone. It is understandable that circumstances may arise and we will help you get back on track with your payment schedule.

3. Q. How do I find out the progress of my debt settlement?

A. You can call us at 877-902-DPLC, Monday thru Friday from 8:30 am – 5pm PST to speak with one of our legal assistants or paralegals.

4. Q. I have a flexible monthly income. Can I still participate in the program?

A. Yes. Our fees and payment schedules are determined on a case-by-case basis. We will develop an affordable and simple plan based on your financial capabilities.

5. Q. Are my creditors going to continue to call me?

A. Upon retaining Debt Pro Law Center, Notices of Representation are immediately sent to all your creditors. Creditors are instructed that all future contact and/or correspondence involving your accounts be directed to our attention. Most creditor calls will stop within 30 to 60 days. If you continue to receive creditor calls, simply contact our office and we will contact the creditor reminding them of our representation.

6. Q. Will my creditors continue to contact me by mail?

A. As previously indicated, most creditor contact, including correspondence, should stop within 30-60 days of us sending out our Notices of Representation. Thereafter, should you continue to receive written correspondence regarding your accounts, you will immediately provide us with copies of this correspondence so that we can address the issue accordingly.

7. Q. Will this program have a negative effect on my credit?

A. Yes. Whether represented by counsel or not, participation in any Debt Settlement Program will negatively impact your credit. However, a successful completion of our program is the absolute first step to rebuilding your credit.

8. Q. Why should I use a law firm to settle my debts as opposed to handling it myself?

A. While it is true that anyone can attempt to negotiate on their own behalf, we have a team of attorneys that will be working on your behalf and will not be intimidated by the aggressive and often illegal tactics of collection agencies. This will give you a level playing field when dealing with these creditors that you may not otherwise have.

9. Q. Who do I call if I have a question about the program or a problem with a creditor?

A. You can speak directly with any of our legal assistants or paralegals whenever you need to discuss a problem or concern.

10. Q. Do I have to include all of my creditors into the program for settlement?

A. No. For emergency purposes, we recommend that you keep at least one credit card open. All accounts entered into the program, however, will have to be closed as creditors will not settle accounts that are still open.

11. Q. How much does this program cost?

A. Attorney’s fees are determined on a case-by-case basis. Fees associated with our debt settlement program are based on level of debt, income and living expenses. It is our goal to provide you the best legal representation possible at a rate you can comfortably afford.

12. Q. What if my creditors won’t settle?

A. While some creditors may be more difficult than others, the law firm is committed to settling all of your debt.

13. Q. Will my attorney stop late fees and interest from accruing on my accounts?

A. Debt Pro Law Center or any debt settlement company cannot stop a creditor from adding interest or late fees to an account. However, your individual program will reflect those fees and/or interest, and is incorporated into the Settlement Program. Because we negotiate the debt down to a fraction of what you owe, your savings are far greater than any interest or late fees that could accrue.

14. Q. What happens if I quit the Program after enrolling?
A. We do not recommend that you quit our Program after enrolling and before settling your debts with creditors. If you do so, you will have paid our initial fees and angered your creditors without realizing any benefits. The benefits of the Program are only realized after you have accumulated sufficient funds in your settlement account and after you begin to actually settle your debts.

15. Q. What are the tax consequences?

A. Your creditors will report cancelled/settled debts exceeding $600 to the IRS and you are required to report the same as income on your annual tax return. However, the IRS permits you to write off any canceled debts up to the amount by which you were “insolvent” at the time:

1. If you are considered insolvent at the time a particular settlement is reached. Insolvency refers to the situation where the debt amount of the consumer exceeds the total amount of that consumer’s assets. If you are solvent, your assets are worth more than your outstanding debt amount.
*If you calculate that your debt amount exceeds your assets and you are in fact insolvent, make sure you fill out an IRS Form 982 and include that form with your tax return so you are not taxed on your savings.
2. If you filed Chapter 11 bankruptcy and the debt was discharged.
3. The debt, if it is non-business, was actually cancelled as a result of Hurricane Katrina.

Our well trained staff is available 9:00am – 5:00pm PST to answer all of your questions regarding our program.

Please call 877-902-DPLC for more information

Bankruptcy FAQ

Q. If I file bankruptcy, will my creditors continue with their collection efforts?

A. Upon filing a bankruptcy petition, the Court will issue an automatic stay. The stay prevents creditors from attempting to collect any pre-bankruptcy claim or from enforcing any pre-bankruptcy judgment.

Q. Can all debt be discharged?

A. No. It is the general policy of the courts to exclude certain categories of debt from discharge. Those categories include, but are not limited to, child support, alimony, certain unpaid educational loans and taxes as well as liabilities incurred as the result of fraud.

Q. Will bankruptcy affect my credit?

A. The Credit Bureaus will record your bankruptcy and it will remain on your credit record for 10 years.

Q. How long is the process?

A. Generally, debt is discharged 3-5 months after the bankruptcy petition is filed.

Q. If I filed bankruptcy in the past, can I file again?

A. Effective October 2005, the legislature increased wait periods between bankruptcy filings. If you have previously filed Chapter 7, you must wait 8 years before you can file again. If you have previously filed Chapter 13, the standard wait period for another Chapter 13 filing is 2 years. If you have previously filed a Chapter 7 and are now looking to file Chapter 13, the wait period is four years in between filings.

Q. Will filing for bankruptcy give me a new start with credit?

A. Not necessarily. A bankruptcy filing will serve as a negative mark on your credit report resulting in a negative impact to your credit score.

Q. If only my spouse files bankruptcy, will it affect my credit?

A. It will if you have one or more joint accounts.

Q. Can I max out all my credit cards and the file for bankruptcy?

A. Such conduct can constitute fraud and serve as a basis for rejection of your bankruptcy petition.

Please call 877-902-DPLC for more information