A Learning Experience: Chapter 7 Financial Education
A fairly recent rewrite of the bankruptcy code seems to be an attempt to educate filers in financial matters. While some could say that these required classes are just "closing the barn door after the horse is gone", if you find yourself ready to file then you need to understand this requirement. Read on to get a heads-up on these two classes, one of which must be taken before you even file your chapter 7 paperwork.
Credit Counseling Class
This portion of the required education should be addressed first, since you must complete it and present the certificate of completion with your initial bankruptcy paperwork filing. You can go ahead and take this class up to 180 days before you actually file. You should be warned that the way you fill out the paperwork for this class can influence your ability to file. The major portion of the class is the creation of a budget; your current budget, that is. Part of the new rules endeavor to prevent those who can afford to pay their creditors from filing a chapter 7 bankruptcy. You will be submitting this budget to a certified and approved financial counseling class for evaluation.
If the credit counseling agency finds that, based on the budget you submitted, you should be able to pay your bills without having to file bankruptcy, you may have an issue on your hands. Filers have the opportunity to refute the findings, and you may still be allowed to file if you can show that you have extraordinary circumstances causing your financial difficulties. For example, if you have higher-than-normal medical expenses or housing expenses, you might still be able to file. To prevent problems, be truthful when filling out the budget, but don't hesitate to list all of your financial obligations on the budget.
Personal Finance Class
Once you have filed your bankruptcy, you must complete this class no later than 45 days after your creditor's meeting. This class provides filers with general consumer-related financial information in the hopes of improving the odds that you won't find yourself in the same situation in the future. You can expect to learn about budgeting, acquiring new credit, putting aside money for savings, and more.
The bankruptcy courts make it easier for filers to complete these classes by offering them several different ways. You can take it online, in person, over the phone and by mail. There is a cost for these classes, but you may be able to get a waiver or reduction in the fee if you can show financial need.