Filing bankruptcy can be a daunting process. If you are drowning in debt and unable to pay your bills, you may have considered bankruptcy. Prior to filing, you must complete pre-bankruptcy credit counseling. Also referred to as budget briefing, the counseling for filing bankruptcy will include an analysis of your current financial situation, as well as alternatives to filing bankruptcy (such as a debt management program) and a plan to not incur more debt. This will enable you to better understand the bankruptcy process and see whether filing bankruptcy is right for you.
What is Consumer Bankruptcy Counseling?
Bankruptcy is a court proceeding in which an insolvent debtor’s assets are liquidated and the debtor is relieved of further liability. Chapter 7 bankruptcy liquidates all or most of your debts (excluding student loan debt), whereas Chapter 13 bankruptcy reorganizes your debt into a single monthly payment.
In order to file for Chapter 7 or Chapter 13, you will need to acquire a bankruptcy certificate by a nonprofit credit counseling agency or debt relief company, such as American Consumer Credit Counseling, that has been approved by the U.S. Trustee’s Office.
You must obtain certificates at two stages of the bankruptcy process:
- When you file for bankruptcy; and
- After you file for bankruptcy but before your debts are discharged.
You can take the pre-bankruptcy credit counseling course at an approved credit counselor’s office, by phone, or online. Allow 60 to 90 minutes to complete the session. During that time, you will be counseled on:
- Your personal financial situation and a review of your current financial buying habits and goals;
- Setting up a personal budget plan; and
- Discussing various debt options including bankruptcy.
After you finish your course, you will receive your first certificate to file for bankruptcy. If you choose to proceed, the certificate is valid for six months.
Post-Bankruptcy Debtor Education
The post-bankruptcy credit counseling certificate focuses on educating consumers on future money management. It must be filed:
- Within 45 days after the creditors meeting (341 meeting) for Chapter 7 cases; and
- No later than the date of your last payment in the repayment plan or the date of the filing for the Motion for a Discharge for Chapter 13 cases.
Bankruptcy certificates enable consumers to understand the factors that led to their financial condition, as well as money management going forward. If you owe too much debt, bankruptcy may be the right decision for you. Make sure to understand all the options available to you towards debt relief for your situation.
If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today.