You have filed for Chapter 7 bankruptcy. Your attorney says you are required to go through credit counseling. But how do you find a credit counseling agency? Do they have to be approved by the U.S. government? The bankruptcy experts at Groce & DeArmon. P.C. will guide you through these questions and more in today’s blog.
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1. Is Credit Counseling Required?
Yes. The government believes that by requiring you to go through counseling, it will help you understand the process and lasting impact of your financial decision to file for Chapter 7 bankruptcy, thereby reducing the risk of having to file ever again. But you may not understand that you will be required to complete two phases of counseling.
The federal government requires that all persons filing for bankruptcy take credit counseling before filing. This will kick start the process. Then, a second phase of counseling will occur after you have filed. This is pre-discharge counseling before your debts are forgiven by the court.
2. What Is Pre-Filing Credit Counseling?
Before filing for Chapter 7, you have to complete pre-filing credit counseling. If you don’t, your case could be thrown out.
Pre-filing counseling is a source of education and support. By going through this, it may become apparent that you have choices other than bankruptcy through debt management. This course will also give you a greater understanding of the advantages and disadvantages of filing for Chapter 7 bankruptcy.
Once you have completed this counseling, you will be given a Certificate of Completion that is valid for 180 days. You will need to give this to your attorney to keep on file and present to the court.
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3. What Is Pre-Discharge Credit Counseling?
This counseling is the last step before the court finalizes your Chapter 7 bankruptcy and discharges your debts. Like the pre-filing classes, these sessions walk you through a more in-depth look at your credit scores, how to build a budget and stick to it, and how to manage money. This is designed to set you up for greater financial success, with the goal of avoiding Chapter 7 bankruptcy in the future.
Like pre-filing credit counseling, you will receive a certificate of completion at the end of the classes. This must be presented to the court before they will discharge your debts through bankruptcy.
4. How Do I Find a Credit Counselor?
You’re already overwhelmed with the bankruptcy process. Trying to find the right counselor should be one of the easiest steps to make. The USTP (United States Trustee Program) offers a list of approved agencies on its website to assist individuals in finding an agency.
5. Does Credit Counseling Cost Money?
Counseling classes can range anywhere from $15 to $50 a session. You may want to shop around to find the price that best fits your budget. If your attorney deems that this would cause continued financial hardship, these fees can be waived in some cases. Talk to your attorney for the best option for you.
6. What’s Next?
Once you have completed your counseling and your debts have been discharged, you can begin the process of rebuilding your credit. While the bankruptcy may remain on your credit for 10 years, you should still work to rebuild your credit any way you can. Ask your credit counselor or attorney for best practices.
Bankruptcy Attorneys at Groce & DeArmon, P.C.
We understand that filing for Chapter 7 bankruptcy is a difficult decision. But bankruptcy doesn’t have to be the end. It can be a new beginning. Our first consultation is always free. Contact Groce & DeArmon, P.C., online or call toll-free 1-800-640-3706 in Missouri or (417) 862-3706 for more information on how we can help.