yes evertything resets. its like playing the game on live for the first time again. you start with nothing and you work your way up just like you did the first time. except you get a little icon next your tag.
Some people choose to stay at 55 without going into prestige, but I'm starting my 7th time around and like "starting over". After going through before, your skill level is improved and you end up ranking up pretty quickly and unlock the weapons again in no time. COD 4 the best game ever !
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