Credit counseling and bankruptcy

When Florida residents encounter severe financial difficulty, they may consider bankruptcy as an option. Bankruptcy is a serious step that can have long-term implications on a person’s finances. Because of this, the United States government requires anyone who files for bankruptcy to complete a program of credit counseling.

Bankruptcy credit counseling is divided into two parts. The first is a session that takes place before an individual or couple can file their bankruptcy case. The second half of this program takes place before the court orders the discharge of any remaining debt. Not all credit counselors are able to offer this type of counseling. Only those who are employed by a credit counseling agency approved by the government may do so.

Every credit counseling agency operates differently, but pre-filing counseling typically requires a meeting with a counselor online or in person. The counselor will review the debtor’s financial situation and will make sure that the debtor understands the bankruptcy process and its consequences. From there, the counselor will also discuss alternatives to bankruptcy, including debt consolidation and debt management programs.

Pre-discharge counseling, on the other hand, prepares clients for their new financial start after bankruptcy. The counseling and education program will discuss things like budgets, financial responsibility and ways of rebuilding credit. Part of the goal of this type of counseling is to help consumers not repeat the same mistakes that got them into debt.

Individuals who are considering bankruptcy may benefit from speaking with an experienced lawyer. Counsel can review the client’s case and make recommendations as to whether Chapter 7 or Chapter 13 bankruptcy is an appropriate decision.