If you find yourself in unmanageable debt, it can be overwhelming to consider your options. However, if you have determined that filing for bankruptcy is in your best interest, understanding what this process entails is crucial. If you are ready to file bankruptcy, it’s important to understand that you must first complete credit counseling courses. As such, if you are unsure what these courses entail or the importance of working with an experienced Rockland County bankruptcy attorney, the following blog explores what you must know about these matters.
What Is Bankruptcy Credit Counseling?
When you make the decision to file for bankruptcy, you will be required to participate in a credit counseling course. The primary purpose of these courses is to help those considering bankruptcy determine if there are alternative, viable options to help manage debt as opposed to bankruptcy. These courses also help ensure that those filing understand the legal, financial, and credit ramifications of declaring bankruptcy in New York.
Federal bankruptcy law mandates that these courses must be completed within 180 days before filing for bankruptcy. Failure to do so can result in the dismissal of your case.
You should note, however, that even if you participate in these courses and an alternative to bankruptcy is discovered, you are under no legal obligation to adhere to that plan. You may still choose to pursue bankruptcy. It’s important to understand that credit counseling is a mandatory prerequisite for most personal bankruptcy cases, including Chapter 7 and Chapter 13. Additionally, the courses you partake in must be from an accredited and approved agency.
When Must Credit Counseling Courses Be Completed?
New York adheres to the federal Bankruptcy Code. As such, under this law, credit counseling courses must be completed within 180 days before filing for bankruptcy.
If you do not complete credit counseling courses before you file bankruptcy, you can anticipate significant delays or the automatic dismissal of your case until you complete this requirement before refiling. Unfortunately, failure to complete these courses is one of the most common technical violations that filers make.
For residents of Rockland County, these filings are handled through the U.S. Bankruptcy Court for the Southern District of New York, ultimately enforcing the completion of these courses before a bankruptcy case may proceed.
Key Timing Requirements
- Credit counseling must be completed no longer than 180 days prior to filing a bankruptcy petition
- You must file the certificate of completion received from the court when filing the bankruptcy petition
- The court, with very limited exceptions, will not grant an extension
What Should You Expect During a Credit Counseling Session?
Credit counseling is not an obstacle intended to prevent you from filing for bankruptcy. Instead, it is an important and informative process that can help you not only understand the bankruptcy process better, but as a means of determining whether or not this option is right for you and your current circumstances.
Typical Credit Counseling Components
- A financial assessment will be completed to determine your income, debts, and expenses
- You will get a recommended budget
- You will explore alternatives to filing for bankruptcy
- A certificate of completion will be issued at the end of the course
Credit Counseling vs. Debtor Education in New York
It’s important to understand that, while credit counseling is required in order to file for bankruptcy, you’ll also need to complete a debtor education course before your case can officially be closed and the remaining eligible debts are discharged. Both courses are required for those filing bankruptcy in Rockland County and throughout the Southern District of New York.
How These Courses Differ
- Credit counseling determines the need for bankruptcy
- Debtor education teaches filers how to manage their finances and prevent additional filings
- Each course has its own distinct timing and certifications
How Does Credit Counseling Impact a Bankruptcy Case?
If you are ready to file for bankruptcy, it’s important to understand the benefits you can receive from the completion of your pre-filing credit counseling courses. As mentioned, these are not required for the sake of adding additional steps for those looking to file. In many instances, the information uncovered in these courses can have significant impacts on the outcome of a bankruptcy filing.
Practical Impacts
- Allows filers to determine whether or not bankruptcy is the best option
- Allows filers to explore the process of alternative choices, like debt consolidation or negotiations with creditors
- Allows filers to understand how bankruptcy will impact their finances and credit score before filing
Contact an Experienced Rockland County Bankruptcy Attorney
If you are considering filing for bankruptcy, it is in your best interest to connect with an experienced attorney with The Law Offices of Allen A. Kolber, Esq, P.C. Bankruptcy can be an incredibly stressful, tedious, and complicated process, and unfortunately, errors can result in serious legal and financial consequences. As such, to ensure that you can reap the benefits of bankruptcy and receive the financial fresh start you deserve, contact our team to learn how we can represent you.
