why do you have to take the course to file bankruptcy

Before you can file for Chapter 7 or Chapter 13 bankruptcy

, you must take a course from a nonprofit credit counseling agency to determine whether you can handle your debt load outside of bankruptcy without adding to what you owe. After filing the case, you must complete another course—debtor education.

Full Answer

What is course-debtor education before filing bankruptcy?

Before you can file for Chapter 7 or Chapter 13 bankruptcy, you must take a course from a nonprofit credit counseling agency to determine whether you can handle your debt load outside of bankruptcy without adding to what you owe. After filing the case, you must complete another course-debtor education.

Why do I need to file bankruptcy?

The primary reason for declaring bankruptcy is to start all over again with a clean slate. However, there is a secondary reason for filing that might ease some of the tension related to your problems. Declaring bankruptcy will stop the badgering phone calls, letters and other attempts to contact and collect from you.

Which credit counseling course do I take when I file bankruptcy?

When you file for bankruptcy, you'll complete two courses—a credit counseling course and a debtor education course. If you're unsure which to take or how to find approved providers, these basics will help: You'll take the credit counseling course before bankruptcy. You'll take the debtor education course after filing your case.

What is a bankruptcy proceeding?

Bankruptcy is a court proceeding in which a judge and court trustee examine the assets and liabilities of individuals and businesses who can’t pay their bills. The court decides whether to discharge the debts, and those who owe are no longer legally required to pay them.

Why do you think the law requires a debtor to receive credit counseling prior to being allowed to file for bankruptcy?

The bankruptcy counseling and debtor education requirements were enacted to ensure that consumers have exhausted all other options and reduce the likelihood of a second visit to the bankruptcy court. The U.S. government must approve counseling organizations to qualify.

What do you need when you file bankruptcies?

The bankruptcy document checklist is:Basic personal information.Income documentation.Tax returns.Real estate.Vehicle titles and records.Bank statements.Alimony/child support verification.Credit/debt records.More items...

What is the downside of filing for bankruptcy?

Filing for bankruptcy can negatively impact your immediate financial future. Obtaining credit after filing for bankruptcy could mean increased interest rates. Obtaining credit after filing for bankruptcy might require security deposits.

Why do you need to file for bankruptcies?

If you have large debts that you can't repay, are behind in your mortgage payments and in danger of foreclosure, are being harassed by bill collectors—or all of the above—declaring bankruptcy might be your answer.

How much do you have to be in debt to file Chapter 7?

Again, there's no minimum or maximum amount of unsecured debt required to file Chapter 7 bankruptcy. In fact, your amount of debt doesn't affect your eligibility at all. You can file as long as you pass the means test. One thing that does matter is when you incurred your unsecured debt.

Can I spend money after filing Chapter 7?

Frivolous spending after you file could put your case in jeopardy. Spending money willy-nilly after you file for bankruptcy could appear like fraud and upend your court ruling.

Do you get out of all debts if you declare bankruptcy?

While the goal of both Chapter 7 and Chapter 13 bankruptcy is to put your debts behind you so that you can move on with your life, not all debts are eligible for discharge.

What is one consequence of going into bankruptcy?

Bankruptcies are considered negative information on your credit report, and can affect how future lenders view you. Seeing a bankruptcy on your credit file may prompt creditors to decline extending you credit or to offer you higher interest rates and less favorable terms if they do decide to give you credit.

How long do you have to pay bankruptcies?

If your surplus income is higher, your bankruptcy will be extended to 21 months and you will be required to make payments from your surplus income.

What Is The Debtor Education Course Requirement?

To receive a discharge in Chapter 7 or Chapter 13 bankruptcy, you are required to take a debtor education course after you file your case. The goal...

Who Must Take The Debtor Education Course?

With a few exceptions, all Chapter 7 and Chapter 13 bankruptcy debtors must complete a course in debtor education before they can receive a dischar...

Approved Debtor Education Course Providers

You must take the debtor education course from a provider approved by the U.S. Trustee (or the Bankruptcy Administrator if you live in Alabama and...

When Do You Have to Complete The Debtor Education Course?

If you file for Chapter 7 bankruptcy, you must take the debtor education course and file your certificate of completion (discussed below) with the...

How Much Does The Debtor Education Course Cost?

The cost of the debtor education course will depend on the provider you select. But the new rules published by the Executive Office for U.S. Truste...

What Happens During The Debtor Education Course?

You can usually take the debtor education course in person, over the phone, or on the Internet. Regardless of the method of instruction, the course...

Filing Your Certificate of Completion

When you complete the debtor education course, you must file a form called Debtor’s Certification of Completion of Postpetition Instructional Cours...

Why are bankruptcy courses important?

Why Bankruptcy Courses Are Important. Filing for bankruptcy is a big decision with a lot of consequences, some of them long-term. Deciding if bankruptcy is the right choice and handling your finances after the proceedings are complete can be daunting parts of the process. This is why there are two bankruptcy courses that would be filers ...

What is the first course of bankruptcy?

The First Course: Credit Counseling. Bankruptcy can be the fresh start people need, a reset for their finances. But it could possibly negatively impact certain areas of your financial life for years to come and therefore should be an option that you consider with the help of an attorney.

What is debtor education?

The Debtor Education course is taken after you’ve filed for bankruptcy. The course is designed to help people better manage their finances going forward so that they won’t need to file for bankruptcy again one day (We recognize that many people file for bankruptcy because of things like medical bills and not because they were not adept at handling their finances). The course covers topics like budgeting, using credit cards responsibly, and breaking bad financial habits.

What is the first credit counseling class?

The first course is a pre-filing credit counseling class designed to help you decide if filing for bankruptcy is the right decision for you. During the course, you’ll review your overall financial picture, things may not be as bad as you thought and can perhaps be managed with strict budgeting. And you’ll learn about alternatives to filing ...

How long does bankruptcy class last?

The course must be taken through an approved agency and can be completed online or over the telephone. The class usually lasts about an hour and must be completed within 180 days of filing for bankruptcy.

How long is the credit card course?

The course covers topics like budgeting, using credit cards responsibly, and breaking bad financial habits. The course lasts about two hours and can be taken online or over the phone. A certificate of completion will be provided once you pass the test.

How long does a bankruptcy certificate last?

The course usually lasts for only two hours or so and can be completed online.

How long does it take to get a Chapter 7 certificate?

You will need to submit the certificate within 60 days of the date set for this meeting.

What is credit counseling?

The purpose of the credit counseling course is to help a debtor review their finances and make sure that bankruptcy is the appropriate path for them to take. You will receive a certificate at the end of the course. Assuming that you decide to move forward with the bankruptcy filing, you will need to submit this certificate with your bankruptcy ...

Do you get a notice of Chapter 7 bankruptcy?

The court will remind a Chapter 7 debtor about the requirement through a specific notice, but debtors filing under other chapters will not receive a notice.

Do you have to meet credit counseling and debtor education separately?

If you are filing a joint petition with your spouse, each of you will need to meet the credit counseling and debtor education requirement separately. There are a few exemptions from this requirement, but they are narrow. For example, a member of the armed forces might be able to get a waiver, as might someone who is filing an emergency bankruptcy ...

Why are bankruptcy laws written?

Bankruptcy laws were written to give people an opportunity to start over when their finances have collapsed. Whether the collapse is a product of bad decisions or bad luck, lawmakers could see that a second chance is a vital fallback in a capitalist economy.

What happens before filing for bankruptcy?

Before you file, you must educate yourself on what happens when you file for bankruptcy. It’s not simply a matter of telling a judge “I’m broke!” and throwing yourself at the mercy of the court. There is a process – a sometimes confusing, sometimes complicated process – that individuals and businesses must follow.

How many Chapter 7 bankruptcy cases were dismissed in 2020?

Ed Flynn, of the American Bankruptcy Institute (ABI), found that 94.9% of Chapter 7 filings in his 2020 study were successfully discharged. Only 21,677 cases of the 442,145 cases completed in 2020 were dismissed.

How many bankruptcy cases were filed in 2019?

There were 774,940 bankruptcy cases filed in 2019, and 97% of them (752,160) were filed by individuals. Only 22,780 bankruptcy cases were filed by businesses in 2019. The other surprise is that most of the people filing bankruptcy were not particularly wealthy.

What happens if you skip the bankruptcy step?

If you skip this step, your filing will be rejected. File the petition: If you haven’t hired a bankruptcy lawyer yet, this might be the time to do it. Legal counsel is not a requirement for individuals filing for bankruptcy, but you are taking a serious risk if you represent yourself.

How long does bankruptcy stay on your credit report?

Filing for bankruptcy impacts your credit score. Bankruptcy remains on your credit report for 7-10 years, depending upon which chapter of bankruptcy you file under. Chapter 7 (the most common) is on your credit report for 10 years, while a Chapter 13 filing (second most common) is there for seven years.

What is bankruptcy court?

Bankruptcy is a court proceeding in which a judge and court trustee examine the assets and liabilities of individuals, partnerships and businesses whose debts have become so overwhelming they don’t believe they can pay them.

What do you need to do before filing for bankruptcy?

Before you can file for Chapter 7 or Chapter 13 bankruptcy, you must take a course from a nonprofit credit counseling agency to determine whether you can handle your debt load outside of bankruptcy without adding to what you owe. After filing the case, you must complete another course—debtor education. The debtor education course, sometimes called ...

How long does it take to get credit counseling before filing for bankruptcy?

The certificate proves that you received credit counseling from an agency approved by the U.S Trustee's office within the 180 days before you file your bankruptcy.

Why do I need credit counseling?

The purpose of credit counseling is to see whether you need to file for bankruptcy or whether an informal repayment plan would get you back on your economic feet. The course is required even if it's evident that your debts are too high and your income is too low for a plan to work.

How long does it take to get credit counseling after filing?

You were unable to obtain counseling within five days after requesting it. If you can prove that you didn't receive credit counseling for these reasons, you must certify that to the court and complete the counseling within 30 days after filing. You can ask the court to extend this deadline by 15 days.

How long does it take to complete a debtor education course?

Debtor Education Course Completion Deadlines. Here are the time limits for completing the course: Chapter 7. If you filed for Chapter 7, you have 60 days after the first date set for the meeting of creditors to complete the debtor education course and file the certification of completion with the court. Chapter 13.

What happens if you miss Chapter 13 bankruptcy?

Chapter 13. If you filed for Chapter 13 bankruptcy, you must complete the class and file the certification of completion before your last repayment plan payment or before you file a motion for discharge. If you miss these deadlines, the court will dismiss your case without prejudice.

Can you get debt counseling online?

However, counseling services are available by phone and online, so it's unlikely that approved debt counseling will ever be unavailable. You can also avoid this requirement if you certify to the court's satisfaction that: You had to file for bankruptcy immediately (perhaps to stop a wage garnishment or foreclosure).

How long do you have to take bankruptcy classes?

How long do I have to take it after filing for bankruptcy? A: In a chap­ter 7 case, you must take the debtor edu­ca­tion post-​​bankruptcy class (1) after you file your peti­tion for bank­ruptcy and (2) within 45 days after your first meet­ing date with your cred­i­tors and bank­ruptcy trustee.

What is pre filing bankruptcy?

The pre-​​filing bankruptcy credit counseling course is also known as a pre-​​petition counseling session or a budget briefing. You will be required to provide a certificate of completion showing you have completed the bankruptcy credit counseling course prior ...

What is the bankruptcy abuse prevention and consumer protection act?

A: The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 includes two provisions mandating financial counseling and education: Before filing for bankruptcy, consumers are required to have a briefing on the alternatives to bankruptcy; and before receiving a bankruptcy discharge a debtor is required to complete an instructional course concerning personal financial management. These provisions were included to provide debtors in bankruptcy with the skills and tools needed to potentially avoid future financial problems.

What is the pre discharge debtor education course?

The debtor education course is also known as the personal financial management course or the post-​​filing debtor education course, and completion of this course is required ...

Does Access and BKClass protect your personal information?

A: Yes, Access and BKClass Inc. are committed to maintaining your privacy and online confidentiality, including the use of special encryption to protect your personal information. Please see our Privacy Policy for more information. Back to top.