Role of credit counseling in bankruptcy
Consumer credit counseling has assumed greater importance with the introduction of the new federal bankruptcy laws that were introduced on 17th October 2005. So, you will not be able to file bankruptcy unless you undergo a credit counseling session at least 6 months prior to filing bankruptcy. According to the new federal bankruptcy laws, in addition to credit counseling, you will also be required to take up a course in personal financial management.
However, you will not be able to take these courses for free.Credit counseling will attract a fee of USD$50. And the duration of the course should be at least 90 minutes. This has not been accepted unanimously though. There are many consumers that think that the credit counseling sessions may not help consumers especially when they are thinking of filing bankruptcy. It is quite likely that these debtors may have failed to derive benefit from other debt solutions and they are being compelled to file bankruptcy. As far as the cost of attending these pre-bankruptcy briefings are concerned, many debtors think that it adds to the financial burden of the debtors.
How will credit counseling help you?
It is expected that the pre-bankruptcy briefings will allow you to explore options that can help you to get out of debt. An efficient credit counselor will make you aware of the different ways of managing debts and handling your finances better. A credit counselor will show you how to manage your cash, will work out a budget for you, and assist you to keep track of bill payments. If required, the credit counselor can also work out a repayment plan for you so that you can catch up with your monthly payments.
Credit counseling can be done in the following manner –
1. In-person counseling
2. One-on-one
3. Over the Internet
4. Attending group classes
5. Over the telephone
The credit counselors that will be giving you pre-bankruptcy briefings need to be approved by the government. The curriculum must be approved by U.S. Trustee Program of Department of Justice. It is responsible for administering different aspects of the new federal bankruptcy laws.
According to the new federal bankruptcy laws filing bankruptcy has become very difficult as the qualifying criteria have become rigid.
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