Monday, November 14, 2016

Why Do I Have To Take Credit Counseling Before I File Bankruptcy?

When most people hear the word “counseling”, they immediately think of stretching out on a therapist’s couch and unloading all of their emotional baggage. This is one type of counseling, but there are other forms that serve other purposes. Marriage counseling is designed to help a troubled couple put their relationship first, and drug or alcohol counseling is meant to help people kick bad habits. When you are in dire financial straits, you might turn to bankruptcy as an answer, but even that comes with a requirement that you participate in counseling.

Before you will be permitted to file a case you have to go through a debtor education course, and provide the bankruptcy Court with certification that you completed the credit counseling course. The reason this is a requirement to your case is:

         When Congress revised the bankruptcy laws in 2005, one of the major concerns was the volume of cases being filed. It was thought that if there was a more robust system of debtor education, bankruptcy would be used as a tool to help an honest but unfortunate debtor get out of immediate financial distress, while providing the tools needed to avoid the necessity of a repeat filing in the future.
         The goal of bankruptcy is to provide automatic relief, but it is not to be used over and over as a way to get out of paying debts. When debtors learn what behavioral patterns got them in financial trouble to begin with, the thought is that those same patterns will not be repeated.
         The courses are designed to help people come up with a budget, so the freedom that comes with spending only what you can afford to spend is realized.
         The counseling is also designed to help people learn how to establish a savings or emergency fund, so resort to use of credit when unexpected expenses come up is not needed.
If you do not take the course before filing, you are given the chance to take it shortly after your case is filed. Our recommendation is to take the course first, and then file because this sequence of events takes the pressure of having a task to complete off your shoulders.

For help with managing overwhelming debt, contact us at We will help by coming up with solutions that work for you and have multiple locations to meet your needs for office visits.

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