How Can Credit Counseling Help Me During Bankruptcy?

 Posted on October 10,2024 in Bankruptcy Advice

Individuals who wish to file for bankruptcy are required to attend credit counseling. Credit counseling aims to help debtors understand their financial options before they file the bankruptcy petition with the court. Once a debtor has completed credit counseling, he or she must submit a certificate of completion to the court in order to continue with the bankruptcy process.

Whether you intend to file for Chapter 7 or Chapter 13, credit counseling will be one of the prerequisites. In this article, we will discuss what to expect from credit counseling, how it can help you during bankruptcy, and how to contact a Texas bankruptcy attorney for more details and assistance with the process.

How Does Credit Counseling Work?

Credit counseling is a service offered by certified organizations, many of which are non-profit and approved by the U.S. Trustee Program. It involves an initial class that lasts around an hour to 90 minutes, during which the credit counselor will:

• Review the debtor’s financial information and circumstances.
• Explain the debtor’s financial options and alternatives to bankruptcy such as debt consolidation, loan modification, or a debt management plan.
• Create a personalized plan for the debtor if he or she chooses alternative options.
• Explain the next steps if the debtor wishes to proceed with bankruptcy. 

The counselor may offer follow-up sessions. Once the counseling is completed, the counselor will provide the debtor with a certificate of completion, which he or she then has 180 days to file with the court.

How Can Credit Counseling Help Me?

Credit counselors are trained to help debtors avoid bankruptcy by informing them of their financial options and providing assistance. Such assistance may include working with the debtor to create a debt management plan that allows him or her to repay the loan over time. Sometimes credit counselors will negotiate the terms of the loan with the creditor on the debtor’s behalf. Then, they will build the debt management plan around the new terms.

If the debtor agrees to the debt management plan, he or she will pay a monthly amount into an account held by the credit counseling provider. The credit counselor will use those funds to start paying off the debtor’s unsecured financial obligations like credit card and student loan debt.

In addition to creating debt management plans, credit counseling can be a great way to learn budgeting techniques, financial planning, and smart money management.

Contact a New Braunfels, TX Bankruptcy Attorney

Credit counseling is only one step in a complex legal process. If you are considering bankruptcy, make sure to consult with a Kerrville, TX bankruptcy lawyer about what to expect and how to achieve the best outcome. At the Law Offices of Chance M. McGhee, we understand the challenges debtors face and the legal nuances of the bankruptcy process. Attorney Chance McGhee is a director of the San Antonio Bankruptcy Bar Association and is ready to create a personalized legal strategy for you. Schedule a free consultation by calling 210-342-3400 today.