When you reach the decision to file for bankruptcy it is critical that you fully understand the process from start to finish. For anyone filing for Chapter 7 or Chapter 13 bankruptcy in the state of New Jersey there is a requirement that you attend a pre-filing credit counseling course before you’re granted a discharge of your debts, and then a debtor education program after your bankruptcy has been filed.
This additional step was introduced in 2005, in an effort to help people with unmanageable personal or business debt better understand their current financial standing, and what brought them to this point in their life. The credit counseling course must be completed 6 months prior to your filing, although exemptions to this timeframe are granted in a very small number of cases.
The counseling course must also be delivered by an approved provider of this type of financial advice, although there are several dozens of these providers available to you. Any concerns you might have about not been able to physically attend a course of this type are unnecessary as the credit counseling can be delivered by phone if necessary, and there are also a number of online courses available too. You must present a certificate to prove you’ve attended a credit counseling course before trying to file for bankruptcy – no discharge of your debt will be possible without this proof.
Exemptions
As with most legal processes there are limited exemptions available to you for having to take these courses. These include if you’re currently unavailable due to military service, or that you are physically or mentally impaired to the extent that taking the credit counseling course is impossible for you. In some very rare cases the court will accept a petition from you to delay the counseling course until after you’ve filed for bankruptcy, but this is the exception rather than the rule.
Credit Counseling
It’s important to be aware that the purpose of the credit counseling course is to discover whether or not you actually need to file for bankruptcy in the first place i.e. is it possible for you to come up with another financial solution to your current debt problems. So, you can expect an extensive review of your current assets, your income and your expenditure.
If the counseling agency finds that you’re actually capable of clearing your debts by simply following a repayment plan, then they’ll advise against filing for bankruptcy. You are not legally obliged to follow any repayment plan the agency suggests, but the court may enforce the repayment plan option if it appears to make more financial sense for both you and your creditors.
Typically, the credit counseling agency will examine your current finances, and certify that you have no option other than to declare bankruptcy.
Debtor Education
Once you’ve completed your credit counseling course, and then filed for bankruptcy, you must then complete a debtor education course before you’re eligible for a discharge. You cannot complete one course without completing the other.
You must complete the post-discharge debtor education program within 60 days of the date set for your initial creditor meeting for a Chapter 7 filing, but for Chapter 13 filings it must be completed before the final payment to your creditors is complete.
The debtor education program must be provided by an approved agency, but again this course can be complete online, by telephone or in person, giving you plenty of options for fulfilling this particular requirement of your bankruptcy filing.
The purpose of this education program is to assist you in your life post-bankruptcy, so you’ll learn to manage your finances, get tips for using credit in a more responsible way, and how to make the most of the fact that you’ve had your debts discharged. You will be expected to develop a budget as part of this education program.