Mandatory Credit Counseling for Chapter 13

Bankruptcy Attorney

Before 2005, there was a whole different set of laws and regulations surrounding bankruptcy filings; however, according to an expert Dayton bankruptcy attorney, these laws resulted in many Chapter 7 filings by people who were considered to have other options available. In other words, it was decided that filing for bankruptcy, and Chapter 7 in particular, was becoming the easy way out for many people. Therefore in 2005 a new law was enacted which made filing for Chapter 7 more difficult and pushed people into filing for Chapter 13 repayment instead.

Credit Counseling Required for Chapter 13

Part of the new law requires all Chapter 13 filers to undergo mandatory credit counseling prior to filing, says the bankruptcy attorney. Credit counseling is scheduled with a licensed professional and involves learning budget management, debt negotiation and credit strategies to improve the individual’s financial knowledge and possibly provide alternatives to filing. The focus of credit counseling is to provide education and show that bankruptcy is an option that is useful, but is not the sole option available to those in debt.

Credit counseling takes 2 hours and usually costs $50, says the bankruptcy attorney. The typical focus is on finding alternate debt repayment strategies, focusing on debt reduction and increasing financial savvy. Since Chapter 13 bankruptcy filing will involve a repayment plan, the credit counseling service focuses on structuring your own repayment plan that may serve as an alternative to filing, and will increase your financial knowledge for the future either way.

Chances are that credit counseling is in some sense a formality, a requirement to be completed before filing. But that is no reason not to pay attention and learn something while attending, says the bankruptcy attorney. Sounder financial knowledge can only serve to make you a better money manager and put you in control of your own financial future.

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