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  • Who is Notified of Your Bankruptcy Filing?

    Who is Notified of Your Bankruptcy Filing?

    Despite being one of the best legal options to get rid of accumulated debt, people refrain from filing for bankruptcy probably because they fear being judged. One of the major concerns people have is that their bankruptcy will be announced to their family and friends, which probably is shameful for them. While considering bankruptcy, and to quell any fear, it is important that people are aware of who will be aware of their bankruptcy filing. According to Dallas based law firm Recovery Law Group, there are two chapters under which individual debtors can file for bankruptcy – Chapter 7 and Chapter 13. Both bankruptcy chapters come with the automatic stay benefit and prevent creditors from taking any collection actions. However, there is a difference in the way your assets and debts are treated in both of them.

    In the case of Chapter 7 bankruptcy, your assets are divided into the exempt and non-exempt property. There are two types of exemptions in bankruptcy, state and federal. Some states allow you to choose between federal and state bankruptcy exemptions, while others like California do not. However, provisions are made to protect different amounts of various properties like house, car, and household goods. In the majority of cases, nearly all property of a debtor comes under the exempted category, thereby offering protection. In case some property is not protected under the exemption, it is sold by the trustee to pay off creditors. Any dues which remain after selling off of non-exempt property are discharged at the end of the bankruptcy.

    When an individual fails to qualify for Chapter 7, the other option available is Chapter 13. In this bankruptcy chapter, a repayment plan is devised keeping in account your earnings, your debt, and your assets, in order to repay your creditors. The repayment plan continues for 3-5 years duration after which any unsecured debts like credit card and medical bills or personal loans are discharged. Though Chapter 13 is slightly tougher, it is ideal for debtors with income above the mean state income.

    Who knows of your bankruptcy?

    In case you are facing a difficult financial situation and wish to weigh in your options you can call 888-297-6203 to consult with expert bankruptcy lawyers. Once you have reached the decision of filing for bankruptcy after discussing with your attorney and undergoing the mandatory credit counseling course, the case is filed at the United States Bankruptcy Court. Due to filing in a court of law, it becomes public record. However, finding the details of your case is like looking for a needle in a haystack. Unless the details are available, it is next to impossible to know about your bankruptcy. There are some people though, who are aware of your bankruptcy proceedings. These include:

    • Your creditors are aware of your bankruptcy as you are expected to provide a list of your creditors to the court. This is because your creditors need to be aware of your impending bankruptcy and the automatic stay. In case you forget to add a creditor’s name, those debts won’t be discharged through bankruptcy. Apart from the creditors, the local bankruptcy trustee is aware of your bankruptcy. However, both court employees and the creditors are barred from reporting about your bankruptcy.
    • Family and friends are generally unaware of your bankruptcy unless they have co-signed a loan which may result in them having some liability with you filing for bankruptcy. Unless they go digging around, they won’t be aware of your bankruptcy till you spill the beans, because the court prohibits court employees and creditors from disclosing such information.
    • Employers are generally not notified of the bankruptcy filing and can only be aware if you inform them or they search through public records. Many people are worried that bankruptcy might hinder their chances of better employment but that is not so. However, bankruptcy shows on your credit report. Thus, if a prospective employer opts for a credit check before hiring he/she might become aware of your bankruptcy filing. One ray of hope for you is that employers cannot discriminate hiring prospective In some cases of Chapter 13, repayment to creditors might be deducted from your pay cheques due to which HR might become aware of your bankruptcy. Similarly, if wage garnishment is taking place then also your employer might become aware of your bankruptcy.

    Bankruptcy has been devised as a mean to help people struggling with insurmountable debts to start afresh. It is no way meant to name and shame you. In case you are considering bankruptcy as a means of getting out of the financial mess, you need to consider an expert lawyer who can guide you through the entire way.


      *Are you more than 60 days past due on your mortgage?

      *Do you own a home?

      Are you currently working?

      By clicking “Submit”, whether I do or do not purchase any products or services on this website, I hereby give my express written consent to receive calls and SMS/text messages, including calls and SMS/text messages made and sent using automated dialing equipment and/or pre-recorded or artificial voice technology and email, about offers and deals that I wish to be kept informed about from (“Partners”), at the phone number and/or email address provided on this form, including any wireless numbers provided, even if I have previously registered the provided number on any Do Not Call Registry. If I do not make a purchase on this website, it is expressly understood that the Partners retain permission to contact me as specified earlier in this paragraph. Carrier SMS/MMS and data messaging rates apply. I also agree that by clicking “Submit” that I agree to the Privacy Policy and Terms and Conditions.

    • What Happens if You Forget to Include a Creditor in Your Bankruptcy?

      What Happens if You Forget to Include a Creditor in Your Bankruptcy?

      A lot of paperwork is involved when you file for bankruptcy, including documentation for your income, assets, and a comprehensive list of your debts as well as your creditors. This complete list of creditors is used by the court to inform everyone concerned about your bankruptcy. Since all of this involves a lot of paperwork, it is quite possible that one or two creditors might miss making the list. Since creditors also have legal rights in your bankruptcy case, if any of them fails to get a mention in your list of creditors while filing for bankruptcy, what effect can it have on your case?

      What is the creditor mailing list?

      According to Los Angeles based law firm Recovery Law Group, the “Creditor Mailing List” (also known as the mailing matrix) should include all your creditors along with their contact information. It must also include debts like student loan debt which are not handled via bankruptcy. Once you file for bankruptcy, this mailing matrix is used to inform all creditors of it. This is an important step as creditors wish to be kept in the loop when such an occurrence happens.

      The creditors, depending on which chapter of bankruptcy you file, might be involved in the confirmation of your debt, or pay-out of your liquidated assets, or might be required to approve the repayment plan. To be eligible for their repayment portion, they are required to file a “proof of claim.” If they have no information about your bankruptcy, they cannot file a proof of claim and thus will lose their chance of getting payment from your bankruptcy.

      The creditor mailing list is an integral part of your case. When you file for bankruptcy, you get automatic stay protection which effectively ceases all collection actions by creditors. Unless the creditors are aware of your bankruptcy, they will not follow automatic stay. Thus you might lose wages to garnishment or have your home foreclosed or face a lawsuit for collection if you miss out any creditor on the creditor mailing list. Additionally, omitting a creditor can affect your bankruptcy too! The bankruptcy forms are filed under a penalty of perjury, i.e. leaving any information off the papers intentionally is considered a crime. The unintentional omission is understood by the court and you are given a chance to rectify your mistake. If you have unintentionally left any creditor off from the mailing list, the consequence depends on which chapter of bankruptcy you have filed.

      Adding creditor in Chapter 7 bankruptcy

      In Chapter 7 bankruptcy, also known as liquidation bankruptcy, your non-exempt assets are surrendered to the court which is then sold off to pay the creditors. Many times, thanks to state and federal exemptions, debtors have little to no non-exempt assets; such cases are known as “no asset” bankruptcy cases. When some non-exempt property is available, which can be sold off to pay creditors, the bankruptcy is known as an “asset” bankruptcy. In case you forget to include a creditor in the creditor mailing list while filing for Chapter 7 bankruptcy, the outcome depends on whether it is an asset or no-asset bankruptcy.

      • Asset bankruptcy

      When you have non-exempt assets, unsecured creditors get paid in proportion to the amount you owe them, when they file a proof of claim. When you leave a creditor off the mailing list, they won’t be notified of bankruptcy and subsequently will not be able to file proof of claim, thereby losing out on their repayment amount. Any unsecured creditor who is left out of their rights can go after you to collect the dues after a bankruptcy discharge. The only respite you have in this case is that they can collect dues only from non-exempt assets. Chapter 7 bankruptcy exemptions can help save a number of your assets. Secured creditors, if they are left out of creditor mailing list, have rights to pursue collection actions against you after your bankruptcy discharge.

      • No asset bankruptcy

      In this case, since there are no non-exempt assets, the unsecured creditors (credit card, medical bills, personal loans, etc.) do not get anything in bankruptcy. Since unsecured creditors do not have any property attached to their debt, they don’t have any proof of claim to file. If you accidentally forget to add an unsecured creditor’s name to the list, not much of consequence happens in this particular case. As is the case with no asset bankruptcy, unsecured creditors, listed or not, get nothing in such cases. The debt gets discharged with creditor having no claim to collect.

      Consequences of leaving a secured creditor out of the creditor mailing list are far more serious than leaving an unsecured creditor out. You can face collection actions after a bankruptcy discharge. Secured debts which are linked to the property are not discharged during bankruptcy but can be surrendered or reorganized. All of this requires the involvement of the creditor. If you wish to reaffirm your car loan, you need to make payments through and even after your bankruptcy. If you miss adding the name of your auto lender or any other secured creditor off the mailing list, the debt won’t be discharged and the creditors are eligible to collect the payment even after your bankruptcy, which may include foreclosure and/or repossession of said property.

      Certain debts like child and spousal support, government taxes, etc. are not discharged during bankruptcy. Since these debts won’t be discharged, the accidental omission of such debts will not have any effect on your bankruptcy case. They were and remain collectible even after bankruptcy. Since a majority of Chapter 7 cases are no asset cases, there aren’t any major consequences of the accidental omission of a creditor.

      What happens if you fail to add a creditor in Chapter 13 bankruptcy?

      Creditors have more involvement in a Chapter 13 bankruptcy compare to a Chapter 7 case. They have a say to review, object or approve your repayment plan. If and when your repayment plan is approved, the payments are divided amongst your creditors proportionately. If you fail to include a creditor in this type of bankruptcy, the debt won’t be included and therefore not discharged at the end of your bankruptcy. This leaves the creditor free to attempt collecting the debt after your bankruptcy discharge.

      Options available for you if you forget to add any creditor when you file for bankruptcy

      Irrespective of the type of bankruptcy filed, if you realize you have unintentionally omitted any creditor, you should contact and inform your bankruptcy attorney of it. They can help guide you on ways to fix the mistake. If you haven’t reached the end of your bankruptcy, filing a form in bankruptcy court to add the missing creditor can help get the problem solved. In case you have got your bankruptcy discharge and get a collection notice from a left out creditor, you need to contact your bankruptcy attorney. Depending on the type of bankruptcy you had filed, the lawyer can find out if the creditor has any right to collect dues or not. An unsecured creditor trying to collect dues from you has no right to them if you filed for a no-asset Chapter 7 bankruptcy. The creditor can be informed by the lawyer of the case in such a situation. If that is not the case, the bankruptcy lawyers can assess whether different factors like the statute of limitation can affect your dues to the creditor.

      If you remember to have left out a creditor, contact your bankruptcy attorney immediately. Wilful omitting of a creditor is considered a form of perjury, which can lead to the filing of criminal charges and even dismissal of your bankruptcy case. Bankruptcy can be trying times, emotionally and financially. It is important to have a bankruptcy attorney by your side in such cases. If you don’t have one, feel free to call 888-297-6203 to get your case evaluated.


        *Are you more than 60 days past due on your mortgage?

        *Do you own a home?

        Are you currently working?

        By clicking “Submit”, whether I do or do not purchase any products or services on this website, I hereby give my express written consent to receive calls and SMS/text messages, including calls and SMS/text messages made and sent using automated dialing equipment and/or pre-recorded or artificial voice technology and email, about offers and deals that I wish to be kept informed about from (“Partners”), at the phone number and/or email address provided on this form, including any wireless numbers provided, even if I have previously registered the provided number on any Do Not Call Registry. If I do not make a purchase on this website, it is expressly understood that the Partners retain permission to contact me as specified earlier in this paragraph. Carrier SMS/MMS and data messaging rates apply. I also agree that by clicking “Submit” that I agree to the Privacy Policy and Terms and Conditions.

      • My Cosigner Filed for Bankruptcy; Does it Impact Me?

        My Cosigner Filed for Bankruptcy; Does it Impact Me?

        In many different places, getting loans or line of credit is not easy. There is always a requirement of a guarantor or a cosigner. Parents, relatives, spouse, or friends could play as guarantor/cosigner. How does the bankruptcy of one cosigner impact the other person? This is what we will discuss in detail here. For best and quick solution on bankruptcy related issues, just hop to Recovery Law Group.

        Cosigner and the relationship

        A Cosigner is a person who is liable to pay the loan in case the primary borrower defaults. The Cosigner is the backup plan for the financial institution to recover its debt. The cosigner could be a known or unknown person who agrees to do so. Cosigners are common for people with short or no loan or credit history. People with bad credit score, lower income, no assets to pledge as collateral, etc., usually require a cosigner for swift loan approvals. California, Texas, New York, Los Angeles, etc., are some states where you would typically see the use of cosigners a lot. However, as a cosigner one can be held liable in case of defaults, bankruptcy and other scenarios. Hence, one should be very cautious when opting for the role of a cosigner.

        Impact of bankruptcy declaration

        The unsecured debts which are usually the case with the debts associated with cosigner get released when bankruptcy is filed. The obligation for the primary debtor to pay off the debts is released. This is true for all types of unsecured debts. This release of obligation, however, does not apply to the cosigner and he/she still remains liable to the debt not paid by primary borrower due to bankruptcy. The primary borrower may declare bankruptcy through Chapter 7 or Chapter 13. In the case of Chapter 7 bankruptcy declaration, the primary borrower gets an ‘automatic stay’, which evades the borrower from all unsecured creditors. However, this benefit does not shield the cosigner. This means the risk and liability will shift to the co-borrower or cosigner completely.

        How to protect your cosigner?

        There are ways to protect the cosigner. The primary borrower is the primary link for the bank or any other financial institution. Hence, the cosigner would not know if any payment due has been missed or not been paid. Keeping the cosigner informed in advance can help in keeping the loan current and reducing the number of payment defaults. If you are the cosigner, it is a good practice to keep a check on the payments on every due date. Any payments missed will directly impact on the credit history, score and various other parameters for both the parties involved in the transaction.

        • Reaffirmation of loan

        Reaffirmation is a very difficult decision to make. This is another way of releasing your cosigner. Reaffirmation is the process of making the self completely liable for the loan. The process also will not allow you to discharge the unsecured debt even if you declare bankruptcy in the future. The bankruptcy of the primary borrower would not affect the cosigner however, default would. In the case of loan default, the cosigner will still be liable.

        Chapter 13 bankruptcy declaration

        Compared to Chapter 7 bankruptcy option, Chapter 13 is very beneficial for the primary borrower as well as the cosigner. The ‘automatic stay’ under Chapter 13 covers and protects the cosigner along with the borrower. This is applicable only if the primary borrower accepts to pay the debt in full and includes the same in Chapter 13 repayment plan. When creating a Chapter 13 repayment plan, one can include the cosigned debt and continue to pay the installments with the income available for disposable. This safety shield is a weak one though and can be breached by the creditors if payments are missed or if the bankruptcy is no longer applicable. Making payments regularly as per the Chapter 13 payment plan is the only way to safeguard your and your cosigner interests.

        Credit score implications

        A credit score takes a severe beating of about 200 points if not more if bankruptcy is applied or declared by the borrower. The cosigner might not be directly impacted by the primary borrower’s bankruptcy unless and until he/she continues to make the payments on time. The bank or financial institutions does not care if cosigner or primary debtor is paying the dues, the payments have to be made on time. Until this is true, cosigner’s credit score is safe. Missed payments directly negatively impact the credit score of both parties involved, the primary debtor as well as the co-borrower.

        What happens if the scenario is reversed?

        What if the cosigner or the guarantor is going to file bankruptcy? This can be a serious problem for the primary borrowers. Even if you are current with your payments, you can be in default if your guarantor defaults. This holds good in most student loan scenarios. This directly has a very negative impact on your credit score as well. To minimize damage, the best way is to disassociate the guarantor from the loan either by proving your credit worthiness based on historic payments to the bank or by employing a new guarantor. It is, however, difficult to remove or replace a cosigner or guarantor.

        Cosigner and borrower relationship can be more complicated than it looks. If you are confused, need help or specialized professional assistance, reach out to (888)-297-6203 for the best solution for all your doubts and questions.


          *Are you more than 60 days past due on your mortgage?

          *Do you own a home?

          Are you currently working?

          By clicking “Submit”, whether I do or do not purchase any products or services on this website, I hereby give my express written consent to receive calls and SMS/text messages, including calls and SMS/text messages made and sent using automated dialing equipment and/or pre-recorded or artificial voice technology and email, about offers and deals that I wish to be kept informed about from (“Partners”), at the phone number and/or email address provided on this form, including any wireless numbers provided, even if I have previously registered the provided number on any Do Not Call Registry. If I do not make a purchase on this website, it is expressly understood that the Partners retain permission to contact me as specified earlier in this paragraph. Carrier SMS/MMS and data messaging rates apply. I also agree that by clicking “Submit” that I agree to the Privacy Policy and Terms and Conditions.

        • Filing for a Chapter 7 Bankruptcy in California? Here’s a Step-by-Step Guide

          Filing for a Chapter 7 Bankruptcy in California? Here’s a Step-by-Step Guide

          Despite going through extreme financial difficulties, people often refrain to file for bankruptcy, probably because they are unclear of the entire procedure. For individuals who are going through a tough financial situation, Chapter 7 bankruptcy is the best bet as it offers people to start life afresh. In this case, your non-exempt assets are surrendered and sold off to pay the creditors. Any unsecured debt left after payment is discharged. The state of California has two systems of exemption to protect your assets, thanks to which the majority of debtors don’t require to surrender any assets. Here’s what happens when you choose to file for bankruptcy:

          1. Decision to file

          Filing for bankruptcy is an important step and therefore should not be taken lightly. You need to collect all your financial information, as well as a list of your assets and debts. The debts should be arranged into two piles for secured and unsecured debts. The former includes mortgage and auto loans while the latter includes credit card and medical debts.

          Filing for bankruptcy removes all your unsecured debts while secured debts like mortgage and car loans are not discharged. Thus, if you are struggling with secured debts, filing for bankruptcy won’t provide you with much respite except if you agree to submit that asset. The pressure of unsecured debts can be eliminated by ensuring that secured debt payments are managed properly.

          It is important to consider a few points before filing for bankruptcy, the primary being your budget. Other factors include adjusting your budget to pay off debts, whether you have been sued for collection, or face any foreclosure or repossession proceedings, etc. In case your financial situation is such that you cannot pay off your creditors, bankruptcy is perfect for you. It stops all kind of collection actions including foreclosure, repossession, lawsuits as well as wage garnishment.

          1. Credit counseling

          A mandatory credit counseling session should be completed by bankruptcy filers within 180 days of filing. This involves sessions with a credit counselor to manage finance and debts without seeking bankruptcy relief. Since credit counseling is mandatory, you need to show proof in court for the same or your case might be dismissed.

          The course offers an excellent way to evaluate your finances, merge certain debts and reorganize finances so that you don’t have to file for bankruptcy. If however, even after the counseling session, bankruptcy appears to be the ideal choice for you, then you need to consult an attorney.

          1. Hire bankruptcy attorney

          Though you can file for bankruptcy without an attorney too (pro se), it is not recommended much as bankruptcy is a complicated process, which requires the expertise of experts like Dallas based law firm Recovery Law Group . Discussing your financial situation with an expert bankruptcy attorney can make you aware if bankruptcy is the best option for you or any other debt management approach is more suitable. Apart from this, the attorney can help determine which chapter of bankruptcy would be best suited in your case. Ideally, Chapter 7 is best, if you are able to qualify for it; if not, then Chapter 13 can help you get out of the financial mess.

          1. File for bankruptcy

          If you decide to file for Chapter 7 bankruptcy which ideally manages to discharge all your unsecured debts, you need to prepare papers accordingly and file them. The papers include information about all your debts as well as creditors, your assets, expenses, and your income; apart from financial transactions that have taken place over a stipulated period of time.

          Filing of bankruptcy papers results in you getting automatic stay benefit which puts a stay on all kind of creditor action. This helps in getting your finances sorted without additional pressure due to constant creditor harassment. The creditors are notified of your bankruptcy by the court to ensure that they are aware of the proceedings as well as do not violate the automatic stay.

          1. Review of your case by the trustee

          Bankruptcy filings are handled by local Bankruptcy Trustee who manages the entire process by mediating between the debtor and the creditors to ensure transparency and honest dealing. The trustee evaluates the assets to divide them into exempted and non-exempted ones. Each state has a different exemption system to safeguard your property. California has two exemptions in place, with equity in assets. Equity is the value of asset devoid of any debt attached to it. If your house is evaluated at $300,000 and you owe $250,000 on the mortgage loan, your equity in the property is $50,000.  Thus bankruptcy exemption covers this equity amount.

          Any financial transactions conducted in the previous few years are also scrutinized by the trustee to find out if any of those transactions benefitted any creditor. If you transfer any asset prior to bankruptcy filing to any family member or friend, the action is considered fraud. The court views such transactions as dubious methods of protecting property during bankruptcy proceedings and generally undo such transactions. Majority of property in bankruptcy cases is exempted, while any non-exempt property is sold off. Any fraudulent transactions if detected might result in dismissal of your bankruptcy case. Thus it is important to display complete transparency of your finances or you might lose assets or your case might be dismissed.

          1. Creditors’ meeting

          After the case review by the trustee, a meeting of creditors, known as “341 hearing” is scheduled. This meeting takes place within 21 & 40 days after the bankruptcy filing. The meeting is attended by you (the debtor), your attorney, and the bankruptcy trustee. The creditors may or may not attend the hearing depending if they have any opposition to the bankruptcy filing.

          You are required to produce certain documents like photo identity, social security, mortgage loan papers, lease agreement, bank statements, etc. The trustee asks questions (after you are sworn)regarding your bankruptcy filings like your financial history and important financial transactions. Once the trustee is through with the questions, creditors (if any) present during the hearing can raise their queries like your plan of handling secured debts, etc.

          Once this is over, the trustee can ask for more pertinent documents or if you wish to amend your bankruptcy filing. If you opt for latter, a second hearing is scheduled with new documents and revised filing evidence.

          1. Handling of secured debts

          Secured debts like a car loan or mortgages need to be handled carefully. If you lag behind in making payments on them, creditors may request the court to lift automatic stay benefit to allow repossession or foreclosure. If you are up-to-date on payments, you can choose between giving up the property and reaffirming the debt. When you choose the latter, you agree to make payments on the debt in a prescribed manner. A reaffirmed debt is not discharged later in bankruptcy. Thus it is important to be sure if you can continue making payments on said property or not.

          1. Bankruptcy process

          Any non-exempt property that you possess needs to be surrendered to the trustee. The property is sold off and the money is distributed among the creditors. It is important to note that since most property is protected by bankruptcy exemptions (state and federal), most debtors don’t have to part with any property. The secured debts are treated as per your loan status and your choice of whether to give up property or to reaffirm the debt.

          1. Discharge of debts

          After selling off of any non-exempt property to pay off creditors, and handling of secured debt loans, any unsecured debt (credit card bills, medical debt, and personal loan) which remains is discharged, i.e. it is legally forgiven. This ensures that creditors can no longer harass you or your family member to collect the dues. Some debts like child and spousal support, student loan debt, certain government taxes, and duties cannot be discharged. They need to be paid off after your bankruptcy discharge.

          1. A fresh start awaits you

          You can begin your life again with a clean financial start. Though bankruptcy affects your credit score negatively, in most cases, it was already gone for a toss. However, with a clean slate, you can make efforts to build your credit score. The first step is to get a credit card, preferably a secure one and make small charges on it which are paid in full and on time. This habit can improve your credit rating in a couple of months.

          If you are going through a bad financial phase and are on the verge of filing for bankruptcy, consult expert bankruptcy attorney California at 888-297-6203 for a solution to your financial problems.


            *Are you more than 60 days past due on your mortgage?

            *Do you own a home?

            Are you currently working?

            By clicking “Submit”, whether I do or do not purchase any products or services on this website, I hereby give my express written consent to receive calls and SMS/text messages, including calls and SMS/text messages made and sent using automated dialing equipment and/or pre-recorded or artificial voice technology and email, about offers and deals that I wish to be kept informed about from (“Partners”), at the phone number and/or email address provided on this form, including any wireless numbers provided, even if I have previously registered the provided number on any Do Not Call Registry. If I do not make a purchase on this website, it is expressly understood that the Partners retain permission to contact me as specified earlier in this paragraph. Carrier SMS/MMS and data messaging rates apply. I also agree that by clicking “Submit” that I agree to the Privacy Policy and Terms and Conditions.

          • Taxes in Bankruptcy

            Taxes in Bankruptcy

            People with overwhelming debts often seek bankruptcy as a viable solution. However, even in bankruptcy, certain debts such as secured debts like mortgage and car loan as well as government taxes and child and spousal support cannot be avoided. Apart from federal taxes, certain states like California also impose state income tax on its citizens. Similar to credit card debt, tax debt also gets added up and often becomes difficult to manage. A bankruptcy filing can definitely get rid of your unsecured debts but many people are confused regarding its effect on their taxes.

            What to know before filing for bankruptcy?

            According to Los Angeles based bankruptcy law firm Recovery Law Group , a number of options are available for dealing with income tax debts prior to bankruptcy filing such as “offer in compromise” (OIC), installment agreements, or filing a previous tax return. Since every financial obligation and individual circumstances are different, the solution also needs to be tailor-made for every client, after careful consideration of all factors.

            OIC option is available to taxpayers with no delinquent returns, who have made all tax payments and are not involved in active bankruptcy. OIC is similar to debt settlement, you offer to pay IRS less than what you owe and if the terms are agreed, you will be able to satisfy your debts. This option is excellent for those people having a higher tax liability and lower income to pay off debts. Initial high payment is expected from the taxpayer in OIC apart from complete compliance with the terms and conditions during the tenure and an additional 5 years after that.

            You can also avail to pay your taxes in installment if the IRS agrees. An installment agreement makes you compliant in the IRS’s eyes and prevents any possible debt collection steps. Additional benefits include reduction of harassed phone calls and letters from IRS while the downside to the agreement is that you continue accumulating interest on the tax obligation for the amount of time it takes to pay the debt.

            Another way of addressing this delinquent tax debt is to file for amended past due to tax return. This option is preferred as filing for it results in a direct reduction in tax liability due to preparer error. It is essential to weigh all the options with your bankruptcy lawyer or financial/tax expert who is aware of statutes of limitations as well as applicable tax codes.

            Viability of bankruptcy 

            Filing for bankruptcy might relieve you of some tax liability from both federal income tax as well as the state tax. However, the tax debt discharge depends on a number of factors like:

            1) duration of tax debt, depends on the date tax returns were due when bankruptcy papers were filed.

            2) the date when tax assessment was due.

            3) whether you are guilty of avoiding (willful or fraudulently) any tax debt.

            4) apart from this, to discharge federal and California state tax during bankruptcy, you need to fulfill these requirements –

            * tax debt is due for over past 3 years from the more recent of either an extension or the original filing date;

            * taxpayer had filed returns in a timely fashion or it has been a minimum of 2 years since the tax returns were filed;

            * taxpayer has not attempted to commit any fraud or tax evasion and the taxes have not been assessed in the past 240 days (240-day rule)

            Benefits of the automatic stay in bankruptcy 

            Consumers can file for bankruptcy under either chapter 7 or chapter 13. In the case of former, all unsecured debts are discharged including income tax if you meet the above-mentioned conditions. During chapter 13 a repayment plan is devised to make payments to all your creditors including IRS if you have included them. You can also enter in an agreement with the IRS to get a rebate in your debts. Any remaining debts are discharged after the duration of your repayment plan. This may include income tax debts if you meet the criteria.

            Whichever chapter of bankruptcy you choose to file under, both come accompanied with the benefit of the automatic stay. This puts all collection actions including foreclosure, wage garnishment and repossession on hold.

            Though you might not be able to get all your tax liabilities discharged when you file for bankruptcy, you might be able to come to a working agreement with the tax credit on a repayment plan within the bankruptcy.

            In case the IRS has obtained tax lien against your property, bankruptcy won’t be able to help you much. Though they will retain the claim on your property, your personal liability will be wiped out. In this case, if the IRS sells the property and gets less than what you owe, you cannot be held for any deficiency. Bankruptcy ensures that none of your assets are seized by the IRS without court permission.

            To fully understand your rights when it comes to taxes and bankruptcy you need to be aware of IRS bankruptcy tax guide. In case you are struggling with tax debts and are considering bankruptcy as an option, call 888-297-6203 to consult with expert bankruptcy lawyers regarding your case.


              *Are you more than 60 days past due on your mortgage?

              *Do you own a home?

              Are you currently working?

              By clicking “Submit”, whether I do or do not purchase any products or services on this website, I hereby give my express written consent to receive calls and SMS/text messages, including calls and SMS/text messages made and sent using automated dialing equipment and/or pre-recorded or artificial voice technology and email, about offers and deals that I wish to be kept informed about from (“Partners”), at the phone number and/or email address provided on this form, including any wireless numbers provided, even if I have previously registered the provided number on any Do Not Call Registry. If I do not make a purchase on this website, it is expressly understood that the Partners retain permission to contact me as specified earlier in this paragraph. Carrier SMS/MMS and data messaging rates apply. I also agree that by clicking “Submit” that I agree to the Privacy Policy and Terms and Conditions.

            • Family Member Debts and Bankruptcy

              Family Member Debts and Bankruptcy

              There are several reasons for taking a loan from family members. Just before bankruptcy or during bankruptcy its quite common to have some loans from relatives, parents, siblings and other family members. The debts have piled up big time and before you file for bankruptcy is there something that you can do with your family member debts? The process of bankruptcy makes you list all your creditors/lenders so that may also include your friends, family members and all lenders irrespective of the debt type. Under chapter 7, if you do not have any non-exempt assets, your lenders might not get anything. The debt hence is written off or eventually settled at a nominal payment.

              The Chapter 13 payment plan will focus on prioritizing debts under the Bankruptcy code or rule. Your family members may or may not receive part or any repayment for their debts. In most situations, the unsecured credit is released as 99% of the payment plans do not cover 100% of the debts. To know more about Chapter 13 and Chapter 7 differences, check Recovery Law Group now.

              Repayment of debt, problems, and concerns

              The debt of family members and friends could be repaid after the bankruptcy situation also. But, the biggest hindrance to that could be potential taxes. Since, the debt is officially done, regarded as bad debt, repayment would be recorded as a gift. This could result in gift tax or some other legal reporting requirement. An individual can gift $14,000 per year an additional cover of $ 5.34 million which can be exhausted over the lifetime. One cannot simply manufacture loans from parents divert money to parents or family members. There is a need for proper documentation and paperwork before listing a person as a creditor before the bankruptcy court.

              When you decide to pay off your family debts before declaring bankruptcy, you are not off the hook either. This looks like an attractive option as you might end up paying nothing to your family members and friends during the bankruptcy process. However, this not a great option either. The law and court consider all creditors equally and it focuses on treating all creditors fairly. The bankruptcy trustee tracks all your financial transactions for ‘preferential transfer period’. The preferential transfer period is a bankruptcy term which is a period of 90 days before declaring bankruptcy. The bankruptcy trustee has the right to propose a reversal of any suspicious transaction of over $600 to a particular creditor. This rule prevents a borrower to transfer the debt to one or few debtors.

              Exceptions in the preferential transfer period and repayment options

              There is also an ‘insider’ term in the bankruptcy procedure. The term ‘insider’ is referring to business associates, immediate family members, friends, etc. The preferential transfer period for such people is one year. The court can claw back any loan repayment of say $10,000 8 months back, that you made to your parents for the bankruptcy procedure. Repaying any creditor or a family member just before bankruptcy is not a crime or an illegal activity. However, they won’t be able to hold that money for long once the bankruptcy procedure begins. Any sort of hidden transactions that include the transfer of assets/properties is illegal and that could certainly block any sort of release of debt whatsoever.

              Paying back your relatives, family members and friends can work only in the case of Chapter 7 bankruptcy procedure. The debtor in this scenario loses all his non-exempt assets. Also, the money earned after the bankruptcy process is completed under Chapter 7 is not under scanner as it is in the case of Chapter 13. So, paying off family debt after bankruptcy becomes a great option if Chapter 7 bankruptcy has been applied for. It is quite obvious to have loans from family members before declaring bankruptcy and everyone wants to payout their family first before all creditors. We can provide professional help to solve your bankruptcy woes legally. Just call +1 (888) 297 6203 to address all your questions and concerns.


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                *Do you own a home?

                Are you currently working?

                By clicking “Submit”, whether I do or do not purchase any products or services on this website, I hereby give my express written consent to receive calls and SMS/text messages, including calls and SMS/text messages made and sent using automated dialing equipment and/or pre-recorded or artificial voice technology and email, about offers and deals that I wish to be kept informed about from (“Partners”), at the phone number and/or email address provided on this form, including any wireless numbers provided, even if I have previously registered the provided number on any Do Not Call Registry. If I do not make a purchase on this website, it is expressly understood that the Partners retain permission to contact me as specified earlier in this paragraph. Carrier SMS/MMS and data messaging rates apply. I also agree that by clicking “Submit” that I agree to the Privacy Policy and Terms and Conditions.

              • Tax Debts Can Drive Even the Rich and Famous to Bankruptcy

                Tax Debts Can Drive Even the Rich and Famous to Bankruptcy

                Despite the popular notion that bankruptcy affects only those people who have low income, there are numerous instances when the rich and the famous had to resort to bankruptcy to get rid of their huge financial debt. One of the notorious cases is that of O.J. Simpson’s lawyer, F. Lee Bailey’s. He gained popularity when he defended O.J. Simpson in the criminal trial for the double murder of Simpson’s ex-wife Nicole Brown and her friend Ron Goldman. Bailey had a brush with success earlier too, representing people in other high profile cases. Unfortunately, despite rubbing shoulder with high placed people, Bailey filed for bankruptcy in Maine to get IRS debts (from 1993-2001 tax returns) to the tune of more than $5 million discharged.

                Why is dealing with tax debts difficult?

                Dallas based law firm Recovery Law Group elaborates that tax debts are often the most complicating types of debts to deal with. This can be attributed to the fact that similarly to student loan and child and spousal support payments, they cannot be discharged during bankruptcy. You have to pay them off to get rid of them. Since IRS rules are complicated, it is not possible for the average human to get a grasp over them. It is no wonder that people hire the services of specialized people like tax lawyers and accountants to deal with them. In case you receive a notice from IRS regarding any debt you owe you should contact 888-297-6203 for immediate assistance from specialized bankruptcy lawyers. It is important to contact the IRS to inquire about the details before accepting or contradicting them. In case the amount is immense, you need to take steps to fight for your right in the court. If their accusations are true, you need to make arrangements to pay the dues.

                Retired F. Lee Bailey had to face lots of obstacles to come up with the million dollars fine. Since he didn’t have that money with him and arranging the huge amount all at once was difficult, he required assistance. In case, you too are facing a similar situation of huge tax debts, a payment plan can be worked out with the IRS. In case, the matter is not handled immediately, action against you can be taken by IRS which may include wage garnishment and/or putting liens on your property. Since you owe the debt to the government, unlike other creditors, it does not require the court’s permission to collect the dues; it can do so as and when it pleases.

                Can bankruptcy aid in tax debts?

                Many people find bankruptcy a great aid in getting out of bad financial conditions. However, can bankruptcy offer protection in case of taxes owed to the government? Tax debts can be discharged during bankruptcy in certain cases. To get respite from them, you need to meet the following criteria:

                • Only Income tax debts can be considered.
                • The tax must be due originally at least 3 years prior to a bankruptcy
                • IRS assessment of the debt must have taken place a minimum of 240 days prior to filing or they haven’t yet assessed it.
                • The tax return for the year in question must be filed.
                • No fraud or evasion of taxes must be involved.

                Normally, people won’t find the criteria too difficult to meet, as long as the debt is old and no false information is provided. However, if there is a discrepancy in the information provided; like a false name or any money hidden from the IRS, you might have to pay the debt in full, even after bankruptcy. In the case of Bailey, he was accused of not paying applicable taxes as well as hiding money which he earned during his long and distinguished legal career. Disputing the claim has led to a long drawn legal battle which is causing him to infuse more money.

                Despite earning huge sums of money during his brilliant career as a successful lawyer, Bailey could not keep himself out of legal trouble due to debts owed to the IRS. In case, you too are facing similar tax-related issues with the IRS, it is important that you get all basic information related to the case and contact a legal expert or an accountant to look into the matter. In case, the debt is too much to be paid and you are already suffering through other financial issues, bankruptcy might be an ideal option. Getting timely professional help can make a huge difference to your bankruptcy case.


                  *Are you more than 60 days past due on your mortgage?

                  *Do you own a home?

                  Are you currently working?

                  By clicking “Submit”, whether I do or do not purchase any products or services on this website, I hereby give my express written consent to receive calls and SMS/text messages, including calls and SMS/text messages made and sent using automated dialing equipment and/or pre-recorded or artificial voice technology and email, about offers and deals that I wish to be kept informed about from (“Partners”), at the phone number and/or email address provided on this form, including any wireless numbers provided, even if I have previously registered the provided number on any Do Not Call Registry. If I do not make a purchase on this website, it is expressly understood that the Partners retain permission to contact me as specified earlier in this paragraph. Carrier SMS/MMS and data messaging rates apply. I also agree that by clicking “Submit” that I agree to the Privacy Policy and Terms and Conditions.

                • Debt Limits under Chapter 13 Increased; All you need to know

                  Debt Limits under Chapter 13 Increased; All you need to know

                  Chapter 13 bankruptcy is distinguished from Chapter 7 bankruptcy norms in terms of complexity. Chapter 13 is much simpler and involves less calculation of various factors like a net of income/expenses, debt, etc. But there are some other factors to be considered for Chapter 13 eligibility. These factors can be listed as follows-

                  • The chapter is applicable only for individuals hence, business or trusts won’t qualify
                  • The individual should not have a recent disqualification
                  • Should be able to demonstrate strong sources of money for making the payments for the plans
                  • Should have debts within the Chapter 13 debt limits

                  If you comply with all the factors above, Chapter 13 is more beneficial to you than Chapter 7. The primary reason for this being the arrangement that allows a debtor to pay off debts as per his/her from the disposable income. Some of the tests under Chapter 7 like the ‘means test’ almost creates an unpractical and impossible plan of paying off debts, particularly the unsecured ones. The debtor’s financial status and ability are at the forefront in Chapter 13, which certainly makes it the best option over Chapter 7.

                  Do you qualify for the Chapter 13 debt limits?

                  As discussed earlier under the eligibility parameters. There is a certain cap for the debt types, below which all individuals qualify for Chapter 13. That cap or limit can be split as below-

                  • The limit for Secured debts is $1,257,850 as per the newest debt limit upgrades versus the earlier cap of $1,184,200. If you evaluated your eligibility for Chapter 13 a few months back and thought, you were just over the cap, this hike of about $70k in the cap will help you be eligible now.
                  • The unsecured debts should be below $419,275, which has been hiked by about $25k from the previous cap of $394,725.

                  These limits are usually changed once in three years. So, if you are not eligible for Chapter 13 for breaching the debt limits, you might well not be for the next three years, until and unless your debts reverse back below the caps. Reach out to the best at Recovery Law Group for more insight on your eligibility and other viable options.

                  How does change in limit cap impact an individual?

                  On the eyes, the limit mentioned above is something which not many will breach. However, the biggest barrier is the home mortgage for many especially for those residing in the expensive states like CA, NY, etc. The mortgage loan by itself could exceed the cap of $1,257,850. The second type of people who could be disqualified are students or newly graduated individuals. If you are carrying an education loan, then there is a high probability that you might exceed the $419,275 cap. As per the latest report, over 6 million students in the US carry over $200,000 of loans. It’s no where near the cap, but many students might be breaching that cap easily.

                  However, there is some relief for the students. One of the courts recently made a judgment favoring the students. The court said that provided the individual meets all other criterions and is upheld only because of an education loan, then the individual could be eligible for Chapter 13. So, if education loans are troubling you, there can be a positive solution around!

                  What is not included in the Chapter 13 debt limits?

                  There are certain types of loans/grants which are not included when calculating the debt limit under Chapter 13. Contingent debts are excluded from the calculation. Contingent debts can be described as a form of liability which depends on a future event or a scenario. The most suitable example for this is if you act as a guarantor on a business/trust loan, you are not liable unless and until the business/trust stops paying the installments or defaults. The same scenario is not applicable for the co-signed debt. Co-sign debt consists of two borrowers, one primary and the other as co-signer. Both usually share equal liability and hence, it has to be included when calculating the net debt for checking eligibility.

                  The non-liquidated debt is also not included for Chapter 13 calculation. A non-liquidated debt is a debt which has no fixed amount, or the liability cannot be realized appropriately at the present moment. The best example for such debt could be a pending lawsuit. The amount of liability that lawsuit can build upon cannot be accurately determined and hence, it is excluded from the debt calculation for Chapter 13 purposes.

                  What if you still are not eligible for Chapter 13?

                  If you do not qualify for Chapter 13, Chapter 11 could be the last hope. However, Chapter 11 is expensive and the whole procedure is very tedious, complicated and long. Consult the best no matter where you are Los Angeles or Dallas, +1 (888) 2976203 is your answer. Get all your questions and doubts addressed right now!


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                    *Do you own a home?

                    Are you currently working?

                    By clicking “Submit”, whether I do or do not purchase any products or services on this website, I hereby give my express written consent to receive calls and SMS/text messages, including calls and SMS/text messages made and sent using automated dialing equipment and/or pre-recorded or artificial voice technology and email, about offers and deals that I wish to be kept informed about from (“Partners”), at the phone number and/or email address provided on this form, including any wireless numbers provided, even if I have previously registered the provided number on any Do Not Call Registry. If I do not make a purchase on this website, it is expressly understood that the Partners retain permission to contact me as specified earlier in this paragraph. Carrier SMS/MMS and data messaging rates apply. I also agree that by clicking “Submit” that I agree to the Privacy Policy and Terms and Conditions.

                  • Child support and Bankruptcy

                    Child support and Bankruptcy

                    Child support is one of the most priority or preferential payments in the eyes of law. One might be able to evade all kinds of secured/unsecured loans but getting away with child support is probably the most difficult task no matter how poor or bankrupt you may be. One more debt that comes in this category is student loans. Students could complete graduation and apply for bankruptcy then and get away with any sort of student loan on their name. This is the primary reason why Student loan has been excluded. Similarly in the case of child support, the federal government, and the law place special emphasis on the care/support of children. The court is very strict on individuals using bankruptcy as a mode to evade supporting their children. Some other debts that include criminal offenses, legal fees, drink, and drive ticket, etc., are also excluded from the bankruptcy procedure.

                    Bankruptcy can help you with your child support obligations

                    Child support is the responsibility of both parents. Child support is the financial assistance for the child until a specific age or until and unless the child becomes capable of covering his/her own needs. The parent who is not having the custody of a child usually pays for child support. On the other hand, the custodial parent has to take care of housing expenses, food/daily care, etc., for the child. The child support is usually determined by the court depending on various factors like income of the parents, specific child needs, duration of support required, etc. The payments are to be used for childcare and they can be direct in cash or cheque to the custodial parent or could be indirect in the form of purchases.

                    Wage garnishment rules

                    Wage garnishment is the process of withholding the income from the W-2 directly by the authorities in order to direct the same towards child support. The percentage of the garnishment varies based on state. As per California, the percentage could go as high as 65% under certain conditions. Under the rules, the child support has to be paid for at least 18 years and could go to 19, if the child is not married and is pursuing education. log on to https://bankruptcy.staging.recoverylawgroup.com/ to know how you can prevent wage garnishment and other consequences.

                    Child support scenario with Chapter 7 and Chapter 13

                    In the case of Chapter 7, the surrendered assets or otherwise called non-exempt assets are to be liquidated and the debts are to be settled with the proceeds. The first right on the proceeds is towards the child support and/or spousal support. Once the proceeds satisfy both of them, the remaining proceeds shall be used for repaying secured debts first and then the unsecured ones thereafter. Whatever debts are not covered in the proceeds of liquidated assets shall be forgiven or written off by the debtors. The case, however, does not hold true in the case of Chapter 13 bankruptcy. Since Chapter 13 proposes a payment plan for a period of 3-5 years. The biggest difference with respect to the ‘automatic stay’ offered under Chapter 13 and Chapter 7 is that the former offers protection in case of child support also.

                    Being current on child support is the basic requirement for receiving any kind of release of debt under Chapter 13. If you are behind on the child support payments, get current on it for beneficial bankruptcy settlements. No matter if you are using Chapter 7 or Chapter 13 bankruptcy, there are certain modes of making child support payments easier. Evading child support isn’t right legally as well ethically but in case you need help in making your life easier with child support call +1 (888)-297-6203 right now.


                      *Are you more than 60 days past due on your mortgage?

                      *Do you own a home?

                      Are you currently working?

                      By clicking “Submit”, whether I do or do not purchase any products or services on this website, I hereby give my express written consent to receive calls and SMS/text messages, including calls and SMS/text messages made and sent using automated dialing equipment and/or pre-recorded or artificial voice technology and email, about offers and deals that I wish to be kept informed about from (“Partners”), at the phone number and/or email address provided on this form, including any wireless numbers provided, even if I have previously registered the provided number on any Do Not Call Registry. If I do not make a purchase on this website, it is expressly understood that the Partners retain permission to contact me as specified earlier in this paragraph. Carrier SMS/MMS and data messaging rates apply. I also agree that by clicking “Submit” that I agree to the Privacy Policy and Terms and Conditions.

                    • Credit Cards, Bankruptcy, and Court wars

                      Credit Cards, Bankruptcy, and Court wars

                      Credit card is the most common unsecured debt in today’s world. As per one of the reports published during late 2017, an average credit card holder could have a yearly debt of $18,000-20,000. The interest rate of credit cards is really high, and it could even breach 30% in certain scenarios. The bankruptcy laws however beneficially help in scrapping the credit card dues as they are part of unsecured dues while you are struggling to keep up with basic needs and priority debts.

                      But it might not be as easy as said, the lender (credit card company) and the bankruptcy trustee try to squeeze the maximum out of the bankrupt person for minimizing their losses or bad debts. The credit card company may challenge the release of credit card debt and one might have to submit substantial evidence regarding the use of credit card to prove the credit card company incorrect. The best practices and ways of evading credit card debt during bankruptcy can be understood further.

                      The entire process of bankruptcy

                      Bankruptcy can be availed as per Chapter 7 and Chapter 13. In both cases, you get ‘automatic stay’ which keeps the lenders at bay for lawsuits, foreclosures, repercussions, and other money collecting modes. This phase is active until the bankruptcy lasts. Under Chapter 7 bankruptcy, you exchange all your assets which are not exempt to the bankruptcy trustee to clear maximum portion of your debt. Under the bankruptcy exemptions, many bankruptcy filers can protect most of their assets. To learn how you can check https://bankruptcy.staging.recoverylawgroup.com/ for detailed info.

                      On the other hand, Chapter 13 bankruptcy is a plan to pay the maximum amount of your dues keeping your income, expenses and disposable income into account. Most Chapter 13 filers end up paying a small portion of their credit card bills or medical bills and the liability never comes back. The downside to this small payment to the unsecured debts is that the bankruptcy trustee and the lenders have several objections. The common appeal by them is to prove the credit card transactions as fraudulent and hence, exclude the same from the release of unsecured debts.

                      How to counter the credit card company claims?

                      The common claim by the credit card companies is with respect to the credit card application. The bank might claim that the credit card application submitted was fraudulent and incorrect. The second most common claim is with respect to the willful default or the credit card was used with the intent to not pay. There is no way to determine a person’s intentions, but financial statements can act as evidence for converting the unsecured debt to a fraud transaction. The following are red triggers for the court to doubt your intentions with the credit card-

                      • You used your credit card for buying luxury items just before the bankruptcy
                      • If you had bought your credit card recently just before announcing bankruptcy
                      • If you had made big purchases immediately after getting a new credit card
                      • Getting cash advances immediately after getting a credit card
                      • The credit limit utilization across the credit cards and
                      • Use of one credit card to pay bills of the other

                      How to overcome the credit card lender claims?

                      Each scenario is different, and it is difficult to analyze common evidence the credit card company might support their appeal with. The best solutions for getting credit card debt released can be listed below-

                      • Avoid using the credit card for at least 90 days before filing the bankruptcy
                      • Try settling the issue with your credit card lender outside the court as the cost of lawsuit and procedure is expensive and lender also does not want to waste effort and time on that. So, a viable solution between you and the credit card lender is the need of the hour sometimes
                      • Provide documents and proofs that make you capable enough to repay most of the credit card dues sooner than later

                      There is no harm in taking specialized help from the experts if you are expecting to file bankruptcy in the near future. It helps you stay ahead of potential problems. Reach out for best professional help right now at +1 (888) 297 6203.


                        *Are you more than 60 days past due on your mortgage?

                        *Do you own a home?

                        Are you currently working?

                        By clicking “Submit”, whether I do or do not purchase any products or services on this website, I hereby give my express written consent to receive calls and SMS/text messages, including calls and SMS/text messages made and sent using automated dialing equipment and/or pre-recorded or artificial voice technology and email, about offers and deals that I wish to be kept informed about from (“Partners”), at the phone number and/or email address provided on this form, including any wireless numbers provided, even if I have previously registered the provided number on any Do Not Call Registry. If I do not make a purchase on this website, it is expressly understood that the Partners retain permission to contact me as specified earlier in this paragraph. Carrier SMS/MMS and data messaging rates apply. I also agree that by clicking “Submit” that I agree to the Privacy Policy and Terms and Conditions.