Beginning Your Bankruptcy Journey
So you’ve decided you need to file for Chapter 7 or Chapter 13 bankruptcy.
You’ll need to complete the bankruptcy forms.
But that’s only part of the process for getting a fresh start.
You will also need to take two bankruptcy counseling courses before and after you file. The courses are designed to make sure you really need to file for bankruptcy. And if you do need to file, they make sure that you have a handle on your finances so that you can make the most of your fresh start in the future.
Here’s how the courses work.
Bankruptcy Course 1
Is bankruptcy the right choice for you?
That’s what Bankruptcy Course 1, also known as the "Credit Counseling Course", is designed to help you figure out.
You can take the course with a number of government-approved course providers like this one.
You can also take the course online or by phone. The course lasts about 1 hour and costs between $10 and $50.
In the course, you will tell the counseling agency your monthly income and expenses. They will help you review your options for your debts. They will also explore whether an informal repayment plan like debt consolidation might be enough to help you get back on your feet.
In most cases, people who take the course still end up filing for bankruptcy. But even for those people, the course is a valuable check-in before filing.
After you complete Bankruptcy Course 1, the course provider will email you or your lawyer a certificate of completion.
This certificate must be filed with your bankruptcy case. If you file for bankruptcy without completing the course, your case can be dismissed by the Court as defective.
Don’t forget to take and complete this course. It’s not difficult, but it must be done.
Bankruptcy Course 2
Once you’ve taken Course 1 and filed your bankruptcy forms, the hardest part is done.
But you don’t have a fresh start yet! To get a discharge of your debts, you will have to take a second bankruptcy course after filing.
Bankruptcy Course 2 is sometimes called the “Debtor Education Course.”
It is offered by most of the same course providers as Bankruptcy Course 1.
Course 2 is similar to Course 1 in that it will ask you about your income and expenses.
The purpose of Course 2 is to educate you on making smart financial decisions so you won’t need to file for bankruptcy again in the future.
Course 2 takes a minimum of 2 hours to complete.
Over those two hours, you will learn:
- How to prepare a budget
- How to manage your money
- How to use credit cards wisely
- How to plan for unexpected financial emergencies
By the end of the course, you will be prepared to tackle your post-bankruptcy life and make the most of your fresh start.
After you complete Course 2, you will get a certificate of completion from the course provider.
You should file this certificate with the bankruptcy court as soon as possible after you file.
You must file the certificate within 60 days after the first scheduled date of your 341 meeting in your Chapter 7 case. If you filed for Chapter 13, you must file the certificate before you make your last plan payment.
If you don’t file your certificate with the court, you will not get a fresh start.
Lots of people are intimidated by the bankruptcy counseling courses, but they don’t need to be.
The courses are simple and straightforward.
Course 1 is designed to help to decide whether you need to file for bankruptcy or whether you can repay your debts some other way.
Course 2 is designed to help you make good financial decisions after filing so that you can stop living check-to-check and start building wealth.
Bankruptcy can be a path to a brighter financial future if you learn from the process and master your finances for the years ahead.