Chapter 7 & 11 Bankruptcy Lawyers - Nick Davis Law

Pre-bankruptcy credit counseling serves two main purposes: assessing whether bankruptcy is the best option for your financial situation and exploring alternatives, such as debt management plans or consolidation. During the session, an approved counselor reviews your income, expenses, and debts to determine if a repayment plan can be negotiated with creditors without filing for bankruptcy. Even if bankruptcy is inevitable, the course helps you understand your options, ensuring that filing is a well-considered decision rather than a rushed choice.

No, completing a credit counseling course from an approved provider is a mandatory step before filing for Chapter 7 or Chapter 13 bankruptcy. Failure to complete the course and obtain the required certificate can result in your case being dismissed. There are some rare exceptions for emergency cases, such as incapacity or active military duty in a combat zone, but these exemptions must be granted by the court. Working with your attorney to complete credit counseling ensures your case proceeds smoothly and without delays.

A typical pre-bankruptcy credit counseling session lasts about 60 to 90 minutes. It can be completed in person, over the phone, or online, depending on the provider. During the session, you’ll review your financial situation, explore potential alternatives to bankruptcy, and receive advice on budgeting and debt management. After the session, you’ll receive a certificate of completion, which you must file with the court as part of your bankruptcy petition. It’s important to complete this step promptly to avoid any delays in your bankruptcy case

To complete pre-bankruptcy credit counseling, you’ll need to provide financial documentation, including a list of your debts, income, living expenses, and any assets. Gathering this information ahead of time allows the counselor to give you a more accurate assessment of your financial situation and the viability of bankruptcy alternatives. If you’re missing certain documents, you can still complete the course, but you may need to estimate your financial data. Your attorney can help you organize the necessary paperwork before starting the counseling session.

The credit counseling requirement is generally the same for both Chapter 7 and Chapter 11 filings. However, Chapter 11 is typically used for businesses or individuals with complex financial situations, so the counseling session may involve a more detailed review of business assets, debts, and cash flow. In either case, you must complete the counseling session and obtain the certificate before filing. For business owners, the counseling might also address strategies for business reorganization and managing debts through Chapter 11.

You must choose a credit counseling provider that is approved by the U.S. Trustee Program. Not all credit counseling agencies meet this requirement, so it’s crucial to verify that the agency is authorized to issue the certificate necessary for bankruptcy filings. Your attorney can provide you with a list of approved providers, ensuring that your credit counseling meets the legal requirements and that you receive the correct certificate to file with your bankruptcy petition.

After completing the pre-bankruptcy credit counseling session, you’ll receive a certificate of completion that must be submitted to the bankruptcy court as part of your filing. This certificate is valid for 180 days, meaning you must file for bankruptcy within that time frame, or you’ll need to retake the counseling course. The certificate proves that you’ve complied with the legal requirement to seek financial counseling before filing, and without it, your bankruptcy case will not proceed.

Yes, businesses can benefit from credit counseling, particularly those considering Chapter 11 reorganization. During the counseling session, businesses can assess whether bankruptcy is the best course of action or if restructuring or debt management could resolve financial issues without court intervention. The session provides valuable insight into cash flow management, creditor negotiation, and alternative financing options. For business owners, this step can offer clarity on how to proceed and whether filing for Chapter 11 is necessary to keep the business afloat.

Yes, credit counseling covers both secured and unsecured debts. During the session, the counselor will review all your debts, including secured obligations such as mortgages and car loans, and help you explore options for managing these payments. While secured debts often cannot be discharged in bankruptcy, the counseling session may provide strategies for keeping up with these payments or negotiating more favorable terms with creditors, such as loan modifications, to avoid foreclosure or repossession.

In some cases, yes. One of the goals of pre-bankruptcy credit counseling is to explore alternatives to filing for bankruptcy. The counselor may recommend a debt management plan or help you negotiate directly with creditors to lower interest rates, extend payment terms, or settle debts. If you have a stable income and manageable debts, credit counseling could help you avoid the need to file for bankruptcy altogether. However, if bankruptcy remains the best option, the session will confirm this and prepare you for the filing process.

Pre-filing credit counseling focuses on evaluating your financial situation and determining if bankruptcy is the right solution, while post-filing debtor education is designed to help you build a solid financial foundation after bankruptcy. The debtor education course covers essential financial management skills, such as budgeting, saving, and responsible credit use, to help you avoid future financial crises. Completing this course is required before receiving your bankruptcy discharge, ensuring that you’re equipped to manage your finances more effectively moving forward.

If you don’t complete the credit counseling course and obtain the certificate before filing for bankruptcy, your case may be dismissed by the court. You’ll then need to refile and start the process over, which can be time-consuming and costly. In rare situations, the court may grant a waiver for the credit counseling requirement, but this is only available in extreme circumstances. To avoid unnecessary delays and complications, it’s important to prioritize completing the counseling session as early as possible in the bankruptcy preparation process.

Yes, credit counseling sessions typically involve a fee, which can range from $15 to $50, depending on the provider. However, if you’re unable to afford the fee, you may qualify for a waiver or reduced fee based on your income. The fee must be paid directly to the credit counseling agency, not the court. Your attorney can help you find affordable counseling options and ensure that you meet the credit counseling requirement without financial strain.

If your financial situation changes after completing the credit counseling session but before filing for bankruptcy, you may need to reassess your options with the help of your attorney. The advice provided during credit counseling is based on your financial circumstances at the time of the session. If significant changes occur, such as a job loss, medical emergency, or unexpected debt, your bankruptcy strategy may need to be adjusted. Your attorney can help determine whether additional steps, such as retaking the credit counseling session or modifying your bankruptcy filing, are necessary.