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Bankruptcy counseling: what you need to know

Making the decision to file a personal bankruptcy petition can be a big step, but the petition itself is only part of what you need to consider. Regardless if you choose a Chapter 7 or a Chapter 13 path, before you can take advantage of a Chapter 7 liquidation a Chapter 13 payment plan you need to be aware of two additional requirements under federal bankruptcy law: credit counseling, and debtor education.

Credit counseling. Because of the serious ramifications of bankruptcy, the law has built into it a mechanism to ensure that you make a careful and informed decision when you decide to choose bankruptcy for debt relief. Accordingly, you may still need to take credit counseling within 180 days before you file a bankruptcy petition. Credit counseling is not a process of long duration. You can complete it in a number of ways' including in person, online or telephonically. Be aware, though, that in addition to meeting the 180 day requirement the law also requires that the credit counseling organization be approved by the US government.

Debtor education. After you have finished credit counseling and have filed your bankruptcy petition, another step you will need to undergo is debtor education. This is similar to credit counseling in some ways; you can usually finish it within a single day, perhaps only in one or two hours. You can also undertake it personally, by telephone or online, and like with credit counseling you need to receive the education from a government-approved provider. 

Until you have completed debtor education, your debts cannot be finally discharged.

This post provides an summary of credit counseling and debtor education requirements, and is not meant to be a comprehensive treatment of the topic. You should not take this post as being legal advice on the subject of bankruptcy in general, or credit counseling or debtor education in particular. If you need more information on the subject, a Pennsylvania bankruptcy law firm can help you to find the answers you need, and help you to begin the petition process.

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