United States Bankruptcy Attorney for Credit Counseling
U.S. Lawyers Helping Debtors Understand Counseling Requirements When Filing for Bankruptcy
For those who have large or unmanageable debts, bankruptcy is often the best option for debt relief. A Chapter 7 bankruptcy will allow debts to be eliminated after certain assets are liquidated, and a Chapter 13 bankruptcy will consolidate a person's debts into a repayment plan that will last from three to five years, after which any remaining debts will be discharged. However, debtors will need to meet a variety of requirements during the bankruptcy process, including completing credit counseling. Understanding what this counseling involves can not only help debtors complete the process of filing for bankruptcy, but it can also provide them with invaluable guidance about how they can maintain financial security in the future.
Pre-Bankruptcy Credit Counseling
During a personal bankruptcy, a debtor is required by law to complete two credit counseling courses through a provider that has been approved by the U.S. Bankruptcy Trustee Program (debtors who live in Alabama or North Carolina must receive counseling from an organization that has been approved by the Bankruptcy Administrators in their state). The first of these courses must be completed within 180 days before filing a petition for bankruptcy.
Pre-bankruptcy credit counseling can be done in-person, although many organizations offer programs that can be completed online or over the phone. The purpose of this program is to ensure that a person will only file for bankruptcy when necessary. A course will provide a debtor with information about budgeting and financial management, helping them understand how much of their income should go toward repaying debts and whether they have options for debt management. Counselors will review a debtor's income, expenses, debts, and other financial information, and they will help prepare a workable budget and debt repayment plan that may allow a debtor to make use of alternatives to bankruptcy. While a debtor is not required to follow this plan, it can provide them with guidance about how to manage their finances after they complete the bankruptcy process.
After completing credit counseling, a debtor will receive a certificate of completion. This certificate will be filed along with their petition for bankruptcy to show that they have met this legal requirement.
Pre-Discharge Debtor Education
The second credit counseling program must be completed during the bankruptcy process. As with pre-bankruptcy credit counseling, a debtor will receive a certificate of completion. In a Chapter 7 bankruptcy, this certificate must be filed with the bankruptcy court within 60 days after the first scheduled date for the meeting with creditors. In a Chapter 13 bankruptcy, the certificate must be filed before the final payment is made in the debtor's repayment plan, although the course can be completed at any time after filing for bankruptcy.
The debtor education course is meant to help debtors understand how they can successfully manage their finances and avoid accruing debts that may require them to pursue bankruptcy or other forms of debt relief in the future. It will cover issues such as budgeting, saving money, using credit cards and other loans correctly, keeping proper financial records, setting financial goals, and dealing with unexpected financial problems. During the course, a debtor will usually prepare a budget that will allow them to plan for how they will cover their ongoing expenses after they have completed the bankruptcy process.
Contact a U.S. Bankruptcy Lawyer
Debtors who are considering bankruptcy should be sure to understand the requirements they will need to meet and the procedures they should follow to deal with debts successfully. A skilled bankruptcy attorney can provide invaluable help for those who are struggling with debt, including advising debtors on which credit counseling providers to use and ensuring that documents demonstrating the completion of these courses are filed correctly. By working with an experienced lawyer, debtors can receive debt relief that will allow them to achieve their financial goals.
