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What should I know about credit counseling with Chapter 7?

On Behalf of | Oct 3, 2018 | Personal Bankruptcy

When a debtor in Pennsylvania is experiencing financial hardship and takes the wise step in consider Chapter 7 bankruptcy, it is not uncommon for there to be certain aspects of the process that are concerning or outright intimidating. It is not a simple matter of filing for Chapter 7 and having the case over and done with immediately. There are key steps that must be taken to ensure that the case is done correctly and mistakes do not prevent the chance to discharge debt and move on. A key aspect of Chapter 7 is the pre-and-post counseling requirements.

Most Chapter 7 cases require the debtor to have credit counseling within 180 days prior to filing. The debtor will also be required to take a course in debt management prior to the discharge of debt. The goal in these courses is to make certain that the debtor has examined every other possible option to bankruptcy and the person learns strategies to avoid the same issues that led to the need to file for Chapter 7. The U.S. government must grant approval to the provider of the counseling services for it to be valid.

The credit counseling and debtor education courses must be done separately. Prior to filing will be the credit counseling. After filing will be the debtor education course – this will be prior to a discharge of debt. Once these are completed, there will be a certificate to show as proof. With credit counseling, finances will be reviewed, possible avenues to avoid bankruptcy will be discussed and a budget will be planned. These can be done over the internet, telephone or in-person. For those who do not have the money to pay for it, there can be a waiver.

With debtor education, the person will be advised on budget development, responsible credit use and money management. These can also be done over the internet, via telephone or in-person. This fee can also be waived. When thinking about Chapter 7 bankruptcy, it is important to have a full understanding of the entire process from start to finish. That includes the counseling and education courses before and after filing for Chapter 7 bankruptcy.