The Orlando Law Group

Mandatory Credit & Financial Education

There is a lot to consider when it comes to bankruptcy, and quite a few terms you will need to know. You will also need to understand some of the obligations you will have when you go through the process, namely the mandatory courses that need to be taken.

Debtors must take two credit education courses. The first course is a credit counseling course that the debtor takes prior to filing a Chapter 7 or Chapter 13 petition. The second course is a financial management course (debtor education) that is taken after the debtor files the petition. Let’s get a closer look at each of these courses, so you have a better idea of what you should expect.

The Credit Counseling Course

Remember, this needs to be completed before you can file for bankruptcy. These courses are generally between an hour and an hour and a half long. These sessions can often be done online, although they are available in person in some cases as well. You can find courses on the US Trustee Program website under “Credit Counseling and Debtor Education” on the left navigation bar.

This counseling includes an analysis of your current financial condition, along with the factors that led to you being in the position you are in now. The course also provides you with information about potential alternatives to going through bankruptcy. It can also provide help creating a plan that can respond to the current situation without you getting into even more debt.

Before you start the course, you will need to have certain documentation available. This includes your monthly household income, monthly household expenses, information about all of your assets, your unsecured debt, and your secured debt. When you find and sign up for a course, they will likely tell you what you will need for your session.

The cost of the course will vary based on the approved company you choose. Typically, you will find that it’s going to be less than $50 for this course.

Something you will want to keep in mind with this certificate is that it is only valid for six months after completing the course. You will need to make up your mind in that time whether you want to file bankruptcy or not. If you go past the six-month mark and still haven’t filed, you will have to take the course again to obtain another valid certificate. Of course, this is not typically a problem for most people. They are already certain they want to proceed with bankruptcy.

After you complete the course, the certificate will be sent to you. You can also have a copy of the certificate sent to your attorney, as well, if the agency is offering this service. You can then file them with the court.

The Debtor Education Course

After you have filed your case, you will then take the debtor education course. Again, you will need to be sure that you are taking a course that has been approved and that is on the US Trustee Program website.

This class helps to teach financial management strategies that can help people to avoid needing to file another bankruptcy case down the road. It can also help to educate people on how to use credit wisely. This course is required to be a minimum of two hours.

The cost of this course tends to be similar to that of the credit counseling course, and it can vary from one provider to the next.

If you filed Chapter 7, you have to file the certificate before the 45th day from the 341 meeting of creditors. If you filed Chapter 13, you have to file the certificate before you make the last payment on the Chapter 13 repayment plan. You want to avoid missing any of these deadlines.

As with the previous certificate, these can be sent directly to you once you have completed the course. Sometimes, the provider can file them with the court for you, but this is rare. It’s generally better to get the certificate and work with your attorney to have it filed properly.

What Is an Automatic Stay?

The automatic stay begins immediately upon filing a bankruptcy petition. This is an automatic injunction prohibiting creditors, with certain exceptions, from collecting debt from you. The automatic stay protects against foreclosure, repossession, liens, garnishments, and harassing phone calls and letters. The automatic stay applies to all types of bankruptcy. Secured creditors can motion the court to have the automatic stay lifted upon a showing of cause.
Having an automatic stay can provide you with some peace of mind, as you will know that your possessions are safe for the time being, and you will not have to deal with phone calls from creditors constantly asking for money.  Many consider this to be one of the biggest benefits of filing bankruptcy, as it can help to keep the creditors at bay.

Credit and Bankruptcy

If a debtor files a Chapter 7 bankruptcy petition and receives a discharge the bankruptcy will show on the debtor’s credit for 10 years. If a debtor files a Chapter 13 bankruptcy petition and receives a discharge, the bankruptcy will show on the debtor’s credit for 7 years.

After filing bankruptcy, most people are a better credit risk because they no longer owe debt to many creditors. In most cases, bankruptcy provides debtors with a fresh start.

Of course, you always want to be careful with your credit. Even if you are being offered credit cards and loans in the first year or so after the bankruptcy, you want to proceed with caution. You need to think about what it was that got you into financial trouble in the first place and avoid making the same types of mistakes in the future. If you had trouble with credit cards or paying back loans on time, it is not advisable to go back to those old habits. If you do, there is a chance that you could end up back in this same position in a couple of years.

Always Work with an Experienced Bankruptcy Attorney

The rules surrounding the various types of bankruptcy can vary, and it’s often difficult to know the best course of action. You need to make sure that you are choosing the best options for your particular case. You can’t simply listen to friends, family, or coworkers who have been through bankruptcy, since every case is slightly different.

The Orlando Law Group, PL can help to ensure that you have the knowledge you need to get through your case with as little trouble as possible. They can help with filing and make sure you don’t miss any deadlines. Get in touch with the professionals at The Orlando Law Group, PL, and let them help with bankruptcy from the start.

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