Insolvent Debtor

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An insolvent debtor is one who is judgment proof having neither income nor assets

The financial state in which a debtor has no assets, money, or property upon which a judgment creditor can attach wages, seize bank accounts, lien property, or otherwise collect through the legal process to satisfy a debt.

For a debtor going through a Chapter 13 bankruptcy who has only exempt property, the debtor’s debt will likely be discharged in full.

Due to the bankruptcy automatic stay, creditors are unable to take any action against the debtor. During this time, collection agencies are strictly prohibited from directly or indirectly communicating with the debtor.

Judgment-proof debtors have rights under both: The Bankruptcy Code by exempting certain types of property from attachment or garnishment and the Federal Fair Debt And Collection Practices Act
(FDCPA), which prohibits unfair collection practices nationwide.

Federal Trade Commission (FTC) has regional offices throughout the country. For more information on debtor rights, visit their website.

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