While filing for a chapter 7 bankruptcy would by no means be considered a complicated process, there are a few more requirements being placed on filers than in times past. If a bankruptcy is in your future, you need to have a good understanding of these two educational requirements. Read on for more information.
Why must you take classes?
In an effort to stem a rising number of bankruptcy filings, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was signed into law and became part of the bankruptcy code under President Bush. The point of the act was twofold: to educate consumers about personal finance so that they do better in the future and to ensure that people filling actually have no other recourse. The result is one class that must be taken before you can file, and one class that is to be completed after you file. It should be noted that both of these classes can be taken online, in person, by mail, and even over the phone -- and that the fees for the classes are on a sliding scale depending your income.
Credit Counseling Class:
This class is not so much an educational event as a check on your financial status. With the thought that bankruptcy should only be considered if your finances are badly out of control, this "class" requires filers to complete a worksheet that resembles a budget, which states your income and your debt obligations on a monthly basis. You can take this class as many as 180 days before you file. You cannot file for bankruptcy without the certificate that comes with the completion of this class.
Great care should be taken when filling out this worksheet, since you may be prevented from having your debt forgiven if you are evaluated to be able to pay your debts without a chapter 7 filing. Don't leave out any debts; this is the time to show just how dismal your financial situation is. Your information will be reviewed by a credit counseling agency, and they must approve of it. If the numbers make it look like you could pay your debts, based on your income, you may not be able to file.
Personal Finance Class:
Once you are given a green light to file and you are past your creditor's meeting, you must complete this class within 60 days and before your bankruptcy finalizes. You can expect to get information about creating workable budgets, rebuilding your credit after bankruptcy, how to use credit more wisely in the future, the importance of having an emergency savings fund, and more. For more information, reach out to a bankruptcy attorney like those represented at http://www.derkdemareelaw.com.
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12 July 2017
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