It's A Learning Experience: Bankruptcy And Education
Posted on: 28 February 2017
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If you have finally decided to take the momentous step and declare chapter 7 bankruptcy, you can now begin to look forward to a better financial future. With the filing of your federal paperwork, you will be able to leave a lot of debt and collection activities behind. Part of the bankruptcy process now includes two different educational classes, so read on to learn more about these classes before you participate in them.
Preventing Fraud and Misuse
Back in 2005, the bankruptcy courts and the legislature formed and passed an update to the bankruptcy codes. This act, the Bankruptcy Abuse Prevention and Consumer Protection Act, sought to put a stop to repeated bankruptcy filings and misuse of the debt relief available. One of the major facets of the bill was to introduce a requirement that consumers undergo a financial evaluation and a financial education class. Both of these classes must be completed before your bankruptcy can be final.
Credit Counseling Class
While it is called a class, it is really an evaluation of your current financial situation. You are instructed to complete a budget where your income and debt load is listed. You are being evaluated for your ability to actually pay your debts, instead of file for bankruptcy. A certified credit counseling agency (approved by the bankruptcy courts) takes a look at your numbers and makes a decision on how able you are to pay your bills.
If the agency recommends that you can pay your debt obligations without declaring bankruptcy, you have the opportunity to refute that by showing evidence that the recommendations won't work for you. You should be cautioned to be honest and accurate when filling out the budget; the penalties for providing false information are serious. As to the timing of this class, it must be taken within 180 days before you file.
Personal Finance Class
Once you have filed your bankruptcy, you can proceed to the personal finance class, which provides some valuable advice and support for those needing a refresher on budgeting, using credit wisely, saving up for a rainy day, and more. The class can be taken within 45 days of your creditor's meeting, and is available online, in person or by mail. You can choose your own class provider, as long as it's on the list of approved providers.
Talk with an attorney from a law firm like Fitzpatrick, Skemp & Associates LLC if you have specific legal questions about any situation.