It is important for you to know that the debt relief option that you have chosen is the best one for you and it will not put you into further debt or increase your stress and debt burden. In order to make sure you will need to educate yourself about the different debt relief options available before you choose one.
The ideal way to be educated about the debt relief options is by undergoing a counseling session from an approved credit counselors and debtor educator. They will of a lot of help.
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- They will not only know about the options but will also be aware of all its requirements, pros and cons.
- They will balance it all with your present financial condition, consider the future financial prospects and suggest whether debt settlement, debt consolidation Pittsburgh PA or filing for bankruptcy would be the most suitable plan to follow.
- They will also draw the best plan to follow in order to manage your money and debt in the most proficient way with precise budgeting and a comprehensive repayment schedule.
Just make sure that you choose the most reliable and experienced credit counselor for that matter, especially if your current situation suggests that bankruptcy is the only debt relief option open for you to choose.
Look for government approved counselors
Since bankruptcy is a complex legal process, the best approach is to work with government approved credit counselors and debtor educators. Look for those counselors and educators that are enlisted with the US Trustee Program.
However, in some states this US Trustee Program may not operate. If you live in these states you should consult the local authorities, judicial district or Bankruptcy Attorney Administrators to find the best counselors and credit counseling organizations or pre-discharge debtor education course providers.
You can file for Chapter 7 or Chapter 13 bankruptcy which is the two specific types of personal bankruptcy.
- In Chapter 7 bankruptcy, the assets that are not exempt, for example your working tool, will be liquidated by a Trustee appointed by the court and the proceeds will be used to pay off your creditors.
- On the other hand, in Chapter 13 bankruptcy you will be relieved from making any payment and the discharge will be issued by the court stating so.
Both these types will have significant effects on your credit score barring your from availing any credit for the next decade.
Requirements of counseling and education
It is for this reason you will need to be educated first, if bankruptcy is the option you have to go for. There are also a few specific requirements for education and counseling for bankruptcy.
Typically, pre-bankruptcy credit counseling and pre-discharge debtor education both are not provided at the same time. Ideally, the credit counseling process must take place prior to filing for bankruptcy and the debtor education should follow after you have filed for bankruptcy.
- When you file for bankruptcy, you will need to provide a certificate of credit counseling completion.
- It is also required by you to provide an evidence of completion of debtor education as well after you file for bankruptcy but before the debts are discharged.
These certificates are of great value in the bankruptcy process and can only be issued by US Trustee Program approved credit counseling organizations and debtor education course providers.
In order to make sure that these certificates are not duplicated and provided by any unscrupulous agencies and other frauds, these certificates are produced through an automated system that is centrally controlled and are numbered.
Pre-bankruptcy counseling session
During a pre-bankruptcy counseling session, the approved credit counseling organization will first evaluate your personal financial situation. According to the present financial situation, they will discuss with you different alternatives to bankruptcy and also about a personal budget plan.
- This initial session of counseling may typically last about one to one and half hour depending on your debt situation and needs.
- Counseling session can be provided over the phone, online but preferably it should be provided in-person.
Ideally, the counseling organization will provide such counseling session for free, especially for those people who cannot pay which is why they are opting for bankruptcy, knowing the risks involved and its consequences.
However, if you want such session to be provided for free, you will need to ask the counseling organization for a fee waiver before the counseling session begins or else you may be charged a fee for the process. This fee is usually very low, about $50, depending on the area you live, the types of services you want and other factors. Before starting the counseling session, the counseling organization must also mention about these fees to you.
Once the required counseling session is completed, you will be given a certificate of proof which you should provide at the court where you are filing bankruptcy. However, the credit counseling organizations will usually not charge any extra fee for providing this certificate.
Post-filing and pre-discharge debtor education
This type of education is provided by an approved course provider and includes different aspects of bankruptcy such as:
- Information on creating a budget precisely
- Ways to manage money proficiently and
- Advice on using credit wisely.
Much like the pre-filing counseling, a debtor education can also take place in person, over the phone, or online. However, the education session will last longer than the pre-filing counseling often as long as two hours.
The fee for such a session may range anywhere from $50 to $100. Once again, if you cannot afford such a fee for pre-filing counseling, you can ask for a waiver from the debtor education provider.
You will find a list of approved debtor education providers online or even at the office of the bankruptcy clerk in your district.
Finishing it off
Once you have completed, you will receive a certificate for the debtor education course which is different form the certificate for pre-filing credit counseling. You will need to use these both for the bankruptcy process.
Last but most importantly, always go ahead with a professional bankruptcy attorney for assured results.
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