Filing for bankruptcy is a serious step in terms of financial management. To more fully understand the impact and assess potential alternatives, individuals must complete a credit counseling course. These courses are required in order to educate individuals on the bankruptcy process, discuss financial options, and review finances in detail. If you are considering filing for bankruptcy, you will need to complete credit counseling and debtor education courses. The skilled lawyers at The Bankruptcy Center of Illinois are here to assist. We represent clients throughout DuPage County, and focus on straightforward solutions that work with the specifics of your financial situation.
Credit counseling and debtor education courses are intended to help people considering the bankruptcy process. By understanding their finances, it is more likely that a debtor avoids a secondary bankruptcy filing. There are different reasons to file for bankruptcy, including discharge of debts, stopping wage garnishment, and in some cases, keeping property. Unfortunately, bankruptcy can affect credit rating and may strain relationships with creditors and others.
Once an individual or a business files for bankruptcy, they are called “debtors,” and those that they owe are “creditors.” Upon filing, debtors receive an automatic stay from the court which halts collection activity. In most cases, individuals file for bankruptcy under Chapter 7 or Chapter 13, and businesses typically file under Chapter 11 or Chapter 13. The law requires that individuals meet credit counseling requirements, however, businesses do not need to complete these courses. If you are filing for bankruptcy as an individual based on business debts, you likely need to meet this requirement. An attorney can help you to understand the best type of bankruptcy for your situation, as well as explore other alternative options to manage and overcome debt.
Credit counseling organizations must be government-approved. After completing pre-bankruptcy counseling, debtors receive a certificate to be submitted with the bankruptcy petition. Most credit counseling courses last two hours, and many can be completed online or even over the phone. Fee waivers are available to those debtors unable to pay for services.
In most situations, credit counseling provides information on improving credit reports, how to repay debt, and how to budget to remain debt-free in the future. Courses may also cover money management skills. To prepare for a credit counseling session, it is important to bring financial documents to the meeting, including a credit report, pay stubs, bank statements, and the most recent year’s tax return.
Debtor education occurs after filing for bankruptcy, and before debts are discharged. Debtor education is intended to help individuals learn how to manage their finances. These may include working with a budget, tracking expenses, and investing in a savings account.
Completing debtor education efficiently is important. People filing for Chapter 7 bankruptcy will be reminded of the requirement through a specific notice. For others filing under Chapter 13, for example, they may not receive a notice. Failing to timely file a certificate can result in serious consequences. Debts may not be discharged. If the case needs to be reopened, there may be additional filing fees and even a motion to require the court to accept the late certificate. If a judge grants the motion, it may be necessary to file another motion to obtain a discharge of debts.
Legally, individuals who decide to pursue bankruptcy will need to show proof that they have completed a credit counseling course and a debtor education course. At the Bankruptcy Center of Illinois, we assist people throughout DuPage County in making informed decisions about their next financial steps. As credit counseling and debtor education course attorneys, we understand that the process can appear daunting, and throughout every step we provide clear communication and efficient service. To learn more, call our office at (773) 993-0024 or complete our online form.