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Bankruptcy Help For Everyday People

Why is credit counseling part of the bankruptcy process?

| Mar 16, 2017 | Chapter 7 |

If you have decided to file for bankruptcy in North Carolina, chances are you did not arrive at that decision lightly. The process can be overwhelming and confusing for some people. Therefore, undergoing credit counseling is a mandatory part of the process so that you know exactly what you are in for and there are no surprises.

Before you even file your bankruptcy petition, you will need to complete a counseling session. According to NerdWallet, if you are filing jointly with your spouse, you will both need to complete the class although you do not have to attend at the same time.

The pre-filing education is important because it will make you aware of the consequences of your bankruptcy and the long-term effects it may have on your finances. For example, a bankruptcy will stay on your credit report for 10 years and may affect your ability to borrow money in the future. The pre-bankruptcy counseling also serves to make sure that you fully understand your financial situation. Your assets, liabilities and alternative options for dealing with your debts will all likely be discussed.

In addition, a second counseling session is required before your bankruptcy can be discharged. That class is intended to educate you on how you can avoid getting into financial trouble again. Basic personal finance topics will be covered so that you will be armed with the knowledge you need to be successful post-bankruptcy. While they are just one small part of the lengthy bankruptcy process, credit counseling classes are important as they are meant to empower you to make sound, educated decisions about your finances.