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Credit Counseling Requirement for Bankruptcy Filers

According to the Federal Reserve Bank of New York, American families succeeded in reducing their unpaid household debts by about $1.3 trillion since the beginning of the recent financial crisis. The decrease, researchers say, may be due in part to people discharging much of their consumer debt by filing bankruptcy. While some people may consider bankruptcy an easy way out of debt, the process is complex and has a number of requirements that you must fulfill in order to receive a discharge of your debts. Among the most important is the requirement to complete credit counseling.

An individual filing for bankruptcy must complete two courses — credit counseling and personal financial management. Both courses are intended to help you create a workable budget and bring you to the most promising financial situation. Each program has specific components that you need to understand. You can find the list of approved California agencies at the US Trustee website.

Credit counseling

As a prerequisite to filing for personal bankruptcy, you must complete a budget and credit counseling session. The session, which must be completed within 180 days of filing your petition, can last between 60 to 90 minutes. You can opt to participate in person, by phone or online. You can apply for a fee waiver if you cannot manage to pay for the session.

During the session, your counselor should discuss your overall financial situation, your current and proposed budget, and recommend alternatives to bankruptcy. This procedure confirms that filing for bankruptcy is the best choice for you under your particular circumstances. In addition, your counselor may design a repayment plan outside of the bankruptcy process. You can choose not to follow this plan.

Personal financial management

Within 60 days of the Meeting of Creditors, you must complete a course in personal financial management. This particular course takes approximately two hours. You may participate in person, by phone or online. The goal of this course is to help you create an after bankruptcy budget plan, to better manage your finances and to use credit more wisely. It is important to note that the court can dismiss your case if you fail to complete this course.

Preserve your rights under the bankruptcy laws by consulting with a knowledgeable Orange County bankruptcy attorney. Contact the Fishback Law Corp. Our skilled attorneys can help you achieve a positive outcome and eliminate your debt stress.

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