The Role Of Credit Counseling in a Bankruptcy Process

Analyzing How Credit Counseling Affects Chapter 7 & Chapter 13 Bankruptcy Results

When struggling financially, filing for bankruptcy can be an option. It is wise to contact a bankruptcy attorney who will help you determine all of your options and whether Chapter 13 or Chapter 7 is right for you

Filling for bankruptcy should not be taken lightly and there are stipulations in place that ensure you have looked at all of your options before filing. One of the programs that exists to determine if bankruptcy is for you is the mandatory credit counseling program.

What Is Credit Counseling & Why Is It Mandatory In Bankruptcy?

Everyone who files for bankruptcy is required to take a credit counseling course. This course exists to evaluate whether or not you’re able to become financially stable again without having to file for bankruptcy. It is required of everyone, regardless of what kind of bankruptcy you’re filing for.

Before filing for bankruptcy, your bankruptcy attorney will ensure you take a credit counseling course. This course will help you create a budget as well as other money management skills. In it you will also work with your creditors to see if you can create a feasible plan to pay each of them. If the plan is agreed upon by all parties, then you would not have to file for bankruptcy. 

In many cases, you may go through the course and find out that repayment and building back your finances is just not possible. In this case, you receive a certificate saying you went through the course and are able to proceed with bankruptcy.

Our “2-Year to 720 Credit Score Program”

Our program is a comprehensive approach to credit restoration. It combines legal expertise, personalized financial counseling, and proven strategies tailored to each client’s unique situation. Our goal is to help you achieve a credit score of 720, which is considered “good” by most credit reporting agencies, thereby expanding your opportunities for future loans and credit at favorable rates. This program is designed to methodically rebuild your credit score to a healthy 720 within two years. With our expert guidance, you will not only work toward improving your credit score but also gain the skills to effectively present your past bankruptcy as a closed chapter, demonstrating your dedication to financial responsibility.

Mandatory Credit Counseling For Bankruptcy: What You Need To Know

When filing for bankruptcy, credit counseling through an approved agency is mandatory regardless of the type of bankruptcy you are filing for. The intent is to ensure you understand all of your options before filing.

In some cases, exemptions have been allowed so certain people don’t have to go through the course. However, exemptions are rare. Exemptions can be granted if the individual can demonstrate certain hardships, such as incapacity, disability, or active military duty, that prevent them from completing the counseling. 

Timing Your Credit Counseling Course Before Bankruptcy Filing

In most cases, you will be required to complete credit counseling within 180 days before filing for bankruptcy. This time frame ensures that the counseling is recent and relevant to your financial situation. 

If you’re considering bankruptcy, contact a bankruptcy attorney who can help you schedule a counseling session as soon as possible, so that you have time to complete it before the next step. The good news is, credit counseling agencies typically offer both in-person and online counseling sessions so you should be able to find one that best suits your schedule. 

Does Credit Counseling Apply To Both Chapter 7 & Chapter 13?

If you are filing for either Chapter 7 or Chapter 13 bankruptcy, you are generally required to complete credit counseling. The course was made into a requirement for all types of bankruptcy in 2005 in order to prevent people from abusing the system.

While both types of bankruptcy require you to do the counseling, the timing and specifics may vary slightly depending on the type of bankruptcy and local bankruptcy court requirements. It’s important to consult with a bankruptcy lawyer to ensure compliance with all necessary counseling requirements for your specific situation. 

Top Reasons To Hire a Bankruptcy Attorney When Considering Bankruptcy 

It is strongly recommended to hire a bankruptcy attorney when you’re thinking about filing. While it may seem that the credit counseling may give you the resources you need to handle your finances on your own, many people find peace of mind and better outcomes when they hire an attorney. 

Hiring an attorney can be highly beneficial due to several reasons:

• Legal Expertise: Bankruptcy law is complex and varies by jurisdiction, making professional guidance invaluable.
• Evaluation Of Options: An attorney can assess your financial situation and advice on whether bankruptcy is the best solution or if alternatives exist.
• Navigating Paperwork: Bankruptcy involves extensive paperwork and legal documentation, which an attorney can handle efficiently. 
• Protection From creditors: An attorney can communicate with creditors on your behalf, providing relief from harassment and ensuring your rights are protected.
• Maximizing Exemptions: Attorneys understand the intricacies of bankruptcy exemptions, helping you preserve as much of your property as possible.
• Court Representation: In court proceedings, having an attorney be your side provides knowledgeable representation and increases the likelihood of a favorable outcome.
• Preventing Mistakes: Mistakes in bankruptcy filings can have serious consequences, such as case dismissal or loss of assets. An attorney helps minimize these risks.
• Post-bankruptcy Guidance: Even after bankruptcy, an attorney can offer advice on rebuilding credit and navigating financial recovery, setting you on a path to a more secure financial future. 

Consider Our Bankruptcy Attorneys to Help You on Your Journey Towards Financial Freedom

With over 80 years of combined experience and over 8,000 happy clients in Hawaii, our Honolulu Bankruptcy attorneys have the expertise needed to help you with your bankruptcy case. Our attorneys will handle all the legal complexities, paperwork, and negotiations with creditors on your behalf. By trusting us, you can navigate the bankruptcy process with confidence.

Take the first step towards a brighter financial future and contact our dedicated bankruptcy attorneys today!