Deciding to file for bankruptcy is rarely easy. Though it can provide much-needed financial relief for those struggling to repay debts, it can also heavily impact your credit score. Additionally, filers must complete a considerable amount of paperwork and take credit counseling courses before their bankruptcy case. If you are unfamiliar with these courses, when you must take them, or who must take them, you’ll want to keep reading. The following blog can help you learn what you must know and why it’s recommended to consult a Memphis, TN consumer bankruptcy lawyer during this process.
What Is Credit Counseling for Bankruptcy?
In 2005, additional steps were implemented with the signing of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). This is the law that added the bankruptcy means test, making it more difficult for debtors to have their unsecured debts forgiven as they must file Chapter 13 depending on their income. Similarly, this act increased the time between filings.
Additionally, this act required those filing for bankruptcy to participate in a credit counseling course within 180 days before filing. This process is to determine whether or not it’s necessary for the filer to pursue bankruptcy or if a repayment plan with creditors would be more beneficial. You must complete the course and file the certification 60 days before the meeting of creditors.
While most courses are in person, they can also occur online or over the phone, so long as it’s with an approved counseling agency.
Does Everyone Have to Go Through This Process?
It’s important to understand that everyone must go through this process. However, there are exceptional circumstances under which a filer could be exempt from undergoing credit counseling. If there is an immediate need to file bankruptcy to avoid considerable harm, the courts could make an exception. Generally, however, if the filer has a mental or physical disability preventing them from participating with reasonable effort, the court could waive the requirement. Additionally, you’ll find that if there aren’t enough approved agencies in your area, you may not have to undergo this process.
Even if your income is below the median for your state and your debt is significant, meaning bankruptcy is the most logical option, you still must go through this process. However, you should understand that you are under no legal obligation to accept the debt repayment plan offered in your counseling course, but you must include it when filing for bankruptcy.
Unfortunately, bankruptcy can be incredibly overwhelming and complex if you are unsure where to start or how to proceed. As such, it’s in your best interest to connect with an experienced attorney to explore your circumstances and determine the best course of action for your needs. At the Arnold Law Firm, our dedicated bankruptcy team is here to help. Contact us today if you are considering bankruptcy to learn how we can guide you through this process.