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What are credit counseling and debtor education?

When you plan to file for bankruptcy, you will be required to provide information regarding your financial situation. As the Federal Trade Commission points out, you will also have to participate in both credit counseling and debtor education. You will be required to take credit counseling prior to filing for bankruptcy, and you will have to participate in a debtor education program following your filing.

Your credit counseling requirement may be fulfilled either online, over the phone or in person, depending on the agency. Debtors must complete the requirement within 180 days of filing for either Chapter 7 or Chapter 13 bankruptcy. You will receive a certificate of completion, which will have to be included in your paperwork when you file. If you fail to take a credit counseling course, the court will dismiss your filing. During credit counseling, you will be able to explore alternatives to bankruptcy to see if any is a good fit.

After you file either Chapter 7 or Chapter 13 bankruptcy, you will have to complete a debtor education course. With a Chapter 7, you have 60 days from the date set during your 341 hearing. If you file for Chapter 13, you must complete the course before you make the last payment according to your plan. During debtor education, you have the opportunity to learn about money management and figure out how to put together a feasible budget for your household.

As the U.S. Courts point out, both credit counseling and debtor education must be done through an agency that has been approved by the U.S. Trustee’s office.

While this information may be useful, it should not be taken as legal advice.

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