Deciding to file for bankruptcy is a major decision that should not be made lightly. Because of this, there are some requirements you must complete.
Pre-bankruptcy counseling must be completed before you can file for bankruptcy and a debtor education course must be completed before your bankruptcy can be finalized.
Pre-bankruptcy credit counseling
The purpose of pre-bankruptcy credit counseling is to review your financial circumstances with a credit counselor to determine if bankruptcy is the right choice for you.
You must complete the credit counseling within 180 days of filing for bankruptcy. This helps ensure that the information you provide is not outdated by the time you file.
There is a small fee for the counseling which may be waived if you show that you cannot afford it. You also have the option to set up a payment plan to pay the fee.
You may complete the credit counseling online or over the telephone. The session typically lasts about an hour. The credit counseling must be completed by a government approved organization.
You may have experienced an unexpected occurrence that negatively impacts your finances, such as a job loss or illness that leaves you believing that bankruptcy is your only option. A credit counselor will thoroughly review your financial situation with you.
The counselor will analyze your income, expenses and debt and see if there are any alternative options for you rather than declaring bankruptcy. You should always be honest with the credit counselor about your financial situation so they can provide you with the most accurate advice and options.
You are not required to use a plan suggested by the credit counselor instead of filing for bankruptcy. Filing for bankruptcy is your own personal choice to make.
However, if the credit counselor develops an alternative plan, you must submit it with your bankruptcy documents.
Debtor education course
Once you have filed for bankruptcy, the next requirement is a debtor education course. You must complete this course before your bankruptcy is finalized and your debts are discharged.
The purpose of the debtor education course is to teach money management skills to help you avoid the need to file bankruptcy again in the future.
You will learn about how to develop a budget, how to handle financial emergencies and how to responsibly manage debt, such as credit card debt.
This course also has a fee and takes approximately two hours to complete. Even if you feel that you always acted responsibility with your money and are only filing bankruptcy because of a tragic unexpected event, you must still take this course to finalize your bankruptcy.
You must complete the debtor education course within 45 days if you are filing for a Chapter 7 bankruptcy. If you file for a Chapter 13 bankruptcy, you must complete it before the date of your last payment under your repayment plan or before you file for discharge.
The bankruptcy process can sometimes feel overwhelming and confusing, but these two requirements are relatively simple if you have the right guidance.
