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What credit education is part of the bankruptcy process?

On Behalf of | Oct 20, 2021 | Personal Bankruptcy

Some people find themselves dealing with financial issues because they never learned how to use credit properly. They started paying for things with credit cards as soon as they qualify for one, and eventually things got out of control.

Other people use credit responsibly their entire lives but then have an unexpected job loss or injury that leaves them with mounting credit card debt or medical bills that are too expensive to pay in full. The bankruptcy system in the United States errs on the side of caution by assuming that someone filing for bankruptcy may need to better understand how to use credit.

Therefore, there are requirements that all individual filers must complete special courses as part of their bankruptcy.

You must complete credit counseling before you file

The rules for bankruptcy require that you complete a credit counseling course before you can even file your petition with the courts. In fact, evidence of the completed credit counseling course is necessary for filing for bankruptcy.

These courses are usually done online and will take between 90 minutes and two hours for you to complete. Those filing in North Carolina must go through an education approved by the state.

You must complete debtor education before your discharge

After you qualify to file for bankruptcy, you have to comply with court requirements to discharge your debts. That might mean liquidating some assets if you file for a Chapter 7 bankruptcy or making several years of payments to your creditors through the courts in a Chapter 13 filing. Once you complete all of the court’s requirements, you can then receive your discharge.

Prior to that, however, you will have to complete a debtor education course. Like the pre-filing credit counseling, you can likely do this process over a computer or even over the phone. You can expect to spend at least two hours on your debtor education course. When you successfully complete it, you will then be in a position to secure the discharge granted at the end of your bankruptcy proceedings.

Understanding the requirements of bankruptcy will make it easier for you to meet them during your filing.


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