Hiring A Bankruptcy Attorney For Peace Of Mind

Back To School: Financial Education Classes And Bankruptcy

4 October 2016

Gabriel Freeman

If you are thinking about making the big move and filing for chapter 7 bankruptcy, there are some additional actions required for filers since 2005. There are two financial education classes and they are mandatory; one must be completed before you file, and one must be completed before your discharge is final. To learn more about these requirements, read on.

Why the need for financial education? 

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, signed into law by President Bush, attempted to make filers more accountable for the state of their finances. The required classes sought to evaluate a consumer's financial situation to ensure that a chapter 7 bankruptcy option was the best move, and to assist filers in making better financial decisions in the future. The results were requirements for a class in credit counseling and a class in personal finance.

Credit Counseling Class

This class must be complete before you file, and may be taken as much as 180 days prior to filing. Upon completion of the class, you will receive a certificate that must accompany your bankruptcy petition when you file. The title of this class is somewhat of a misnomer, it is not really a "class". The main point of the Credit Counseling Class is the formation of a budget, which will demonstrate how dire your financial situation really is, and thus your need to file for bankruptcy. Your budget is reviewed by a credit counseling agency, who determines whether or not you are eligible to file for chapter 7.

Take care to include all of your debts and financial obligations when completing your budget; this is not the time to make your financial situation look better than it really is. If the credit counseling agency determines that you should be able to pay your debts without filing for bankruptcy, you may have to convince the bankruptcy trustee of your need for bankruptcy during your creditor's meeting.

Personal Finance Class

This class must be taken no later than 60 days after your creditor's meeting and must be done before your bankruptcy is final. Taking about 2 hours to complete, it can be taken online, over the phone or in person. This class presents filers with valuable information about getting your financial house in order and preventing a re-occurrence of past problems. The goal of the class is to teach fillers how to recover from their bankruptcy and how to make better decisions in the future when it comes to credit, making and sticking to a budget and using savings to prevent overuse of credit cards or other predatory lending choices.

For more information about these education requirements, talk with your bankruptcy attorney.

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