Filing for Chapter 7 or Chapter 13 is a big decision, but it can also be the best option to eliminate overwhelming debt and get your financial house back in order.
Bankruptcy can be a long and complicated process, and consulting with an experienced attorney is the best way to ensure you receive debt relief. As part of the process, the U.S. Bankruptcy Code requires filers to complete two credit counseling sessions.
What to expect
The good news is that counseling sessions are usually brief and are often considered the most painless part of the process. The requirements include:
- Pre-filing counseling: Your case will be thrown out if you file before completing this session. Courses focus on educating you on the pros and cons of bankruptcy and present alternate debt relief options.
- Pre-discharge counseling: After filing, this is the final step before the court approves your case and discharges the debt. This course focuses on helping you manage your money in the future, including income, expenses, strategies to save money and ways to protect your credit score.
Courses are only from Justice Department-approved nonprofit credit counseling agencies. You have to pay for these classes, and most of them cost about $15 to $50 per session.
Building a financially secure future
Bankruptcy is not a quick fix for eliminating massive debt. Chapter 7 can take three to six months, while Chapter 13 takes three to five years to complete. However, after utilizing the tools provided through counseling, most people see credit scores recover within one to two years.