Understanding The Bankruptcy Process
The newest bankruptcy bill has placed certain restrictions on consumers before
they are allowed to file for bankruptcy. If you're considering filing for bankruptcy you need
to understand how these changes are going to impact you.
Within one hundred and eighty days (180 days) of filing for bankruptcy you must
have received credit counseling instruction. This new requirement was part of the
Bankruptcy Act of 2005 and is now mandatory. These sessions are designed to
do the following:
- review your financial situation
- decide if there are alternatives to bankruptcy
- develop a personal budget plan
You must file with the courts when you make an application for bankruptcy proof that
you have attended this session. These sessions are offered in person, by phone and online
as well. Some organizations may charge a fee which can be waived if you request it and if
the agency agrees. Be sure that you ascertain that any counseling firm is approved by
the US Bankruptcy court before you enroll.
After Filing For Bankruptcy
Once you have filed for bankruptcy (in addition to adhering to the plan that the court
has laid down for you) before your debts
can be fully discharged you will also have to take
a Debtor Education Course. This course is typically a couple of hours
long and should cost you about $50 - $100.
These courses must be from approved providers and should include information that will
- develop a budget
- manage your money
- using credit wisely
Once you've completed the course you will receive a certificate of proof. This certificate
is not the same as the one you received "pre-bankruptcy" and is required to be filed
in the court before your debts can be expunged by the court. It's important to note that unless
they have clearly explained before you took the course that the certificate has an additional
fee the company is not allowed to charge you for the certificate of completion.
© iStockphoto.com - GeofferyHolman
Credit Counselors - What You Need To Know
Make sure you carefully research any credit counseling services before you agree on one.
If you're looking for a credit counselor that is approved by the bankruptcy courts you can
find a list of Approved Providers
online or you can ask at the clerk's office where you filed your bankruptcy. Be sure you
understand up front the following:
- what services are provided
- what fees are charged
- how they get their fees
For additional information, you can read more about the requirements for pre-bankruptcy
education courses as well as post-bankruptcy debtor education in the FTC's booklet
Information about Credit Counseling and Debtor Education.
Knowing the requirements before you file for bankruptcy will help you understand all of
your rights and obligations.
Related topics: Types of Bankruptcy,
New Bankruptcy Laws,
Life After Bankruptcy,
What Bankruptcy Cannot Do