A couple of years ago, the Congress of the United States overhauled the US Federal bankruptcy laws in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. One of the provisions that was written into the new procedures for filing for bankruptcy, was the requirement that all debtors must attend bankruptcy classes.
The debtor is the person who is going through the chapter bankruptcy filing. The new law mandates that the debtor must take two different types of classes during the course of the proceeding. The first class is for pre-filing counseling. The second required class is for pre-discharge education purposes.
During the first of the set of mandated classes, the debtor must attend a class that provides information and counseling from approved professionals before declaring for brokeness. The purpose of the pre-filing counseling class is to help the debtor gain a full understanding of the process of a new bankrupt filing, to understand the consequences that it leads to with regard to their credit score and long-term ramifications, and to investigate available alternatives to the drastic decision to file.
One of the purposes of pre-filing bankruptcy classes is to take the debtor through the process of thoroughly examining their financial situation with the pre-filing counselor. This includes looking at their earnings, all of the household expenses, all of the debts they have incurred and their monthly obligations. The next step is to do a budget analysis based on this information and to look at any alternatives that may be available, instead of filing for bankruptcy.
As part of the counseling, instruction will be given on the differences between filing Chapter 7 and filing Chapter 13. As well, an overview of both the advantages of declaring for brokeness and the disadvantages will be discussed.
After the debtor goes through the classes for pre-filing counseling, they will be issued a certificate of completion. They must have this certificate of completion in order to proceed to the next step of filing for bankruptcy.
The second of the required classes that a debtor must take is the pre-discharge education class. The debtor is to take this class between the time that they complete the claim form for brokeness and file it with the court and when it is discharged. A bankruptcy is not considered complete, and the debts are not eliminated, until it is discharged by the court. The discharge of it is the final step in the process.
Typically the pre-discharge classes are two hours in length. During that class the consumers learn about budgeting and more effective money management skills. They also learn about the proper uses of credit, how to re-build a positive credit record, how to recognize predatory lending practices and how to avoid such practices, and how to take steps to protect against identity theft.
Under the new laws, it can not be discharged until the debtor shows proof that they have completed both the pre-filing and the pre-discharge classes. Just at with the pre-filing counseling class, the debtor will receive a certificate of completion at the conclusion of the pre-discharge education. They must file this certificate with the court in order for their bankruptcy to be discharged.
The bankruptcy classes have to be taken from an institution that is on an approved list and which is authorized to issue the class completion certifications. The cost of the classes will vary depending on the organization that is offering them and depending on the format of the class.
Some companies offer the classes online, while others provide classes over the phone and still others offer the traditional classroom environment. In most parts of the country, the cost ranges from $50 to $150 per class.
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