Our Certified Credit Counselors can guide you through the daunting process of getting out of debt.
Bankruptcy is a serious decision that is not right for everyone. If you’re thinking about filing for bankruptcy, talk to a lawyer to discuss your options. Most likely your lawyer will refer you to a non-profit credit counseling agency like Advantage CCS for assistance.
After speaking with your lawyer, if you think you need to declare bankruptcy because your debts are just way too high and there is no way you can pay them, the law dictates that you must complete a bankruptcy counseling session with a licensed agency. The reason for this counseling session is to obtain a Certificate of Completion before you can even file for bankruptcy. Advantage CCS is approved to provide bankruptcy counseling and certificates in 48 states, excluding Alabama and North Carolina. We are approved to provide these services by the Executive Office of the United States Trustees (EOUST).
Our bankruptcy counseling session explains the process and consequences of declaring bankruptcy, lists some other possible options, and provides you with bankruptcy counseling and advice on how to rebuild your financial future. Upon completion of the bankruptcy counseling session, Advantage CCS will issue the Certificate of Completion required as part of the pre-filing conditions.
When you have completed the bankruptcy counseling session, if you decide to proceed with filing for bankruptcy, be advised that Advantage CCS does not complete any bankruptcy paperwork, provide any legal advice, or act as an attorney. You must give that certificate to your lawyer before you can file the bankruptcy paperwork with them.
Types of Bankruptcy –
Bankruptcy is a process in which debtors can eliminate or repay some or all of their debts under the protection of the federal bankruptcy court. For the most part, bankruptcies can be divided into two types, i.e. liquidation and reorganization, or better known as Chapter 7 and Chapter 13 bankruptcies.
Chapter 7 bankruptcy, provided for under the United States federal law, entitles the debtor to a fresh start. It typically lasts anywhere from three to six months. Chapter 7 bankruptcies usually eliminate most kinds of unsecured debt, which can include credit card debt, medical bills, most personal loans, judgments resulting from car accidents and deficiencies on repossessed vehicles, and a few other instances of unsecured debt. Additionally, Chapter 7 bankruptcy filers usually get to keep most of their personal property such as your car, clothes, household furnishings, personal belongings, etc.
If you owe money on a secured debt such as a car loan, you have a choice of allowing the lender to repossess the vehicle, continuing your payments under the contract if the lender agrees, or paying the lender a lump sum amount equal to the current value of the car. Some types of secured debts can be eliminated in a Chapter 7 bankruptcy, so talk to your lawyer in-depth about this.
Chapter 13 bankruptcy, also known as the “wage earner” bankruptcy, is basically an interest-free debt repayment plan through which the filer’s debts are consolidated and payments are made on the total debt over a three to five year period. While in a Chapter 13 debt repayment plan, creditors cannot collect from you and they are required by a Federal Court to adhere to the terms of the plan.
One key element to Chapter 13 bankruptcy is that the debtor must be working or have a consistent source of income in order for the repayment plan to be approved by the court. That’s where the nickname “wage earner bankruptcy” comes from. Chapter 13 bankruptcy filers must be able to pay for monthly living expenses in addition to being able to make a payment to the court to consolidate their debts.
Debts that can generally be consolidated under Chapter 13 bankruptcy include: mortgage arrears, balances on vehicle loans, student loans, credit card debts, and other unsecured debts. If you have secured debts, Chapter 13 bankruptcy gives you the option to make up missed payments to avoid repossession on a vehicle or foreclosure on a home. You can include these past due amounts in your repayment plan and make them up over time. All outstanding debts must be included in the Chapter 13 consolidation.
How to Claim Bankruptcy –
In general, the first step anyone facing debt should take is to contact a certified credit counselor. There may be another solution before you start asking about how to claim bankruptcy.
In addition, the Bankruptcy Reform Act of 2005 makes it a requirement for anyone seeking to claim bankruptcy to go through a pre-filing credit counseling session. If you attempt to file before going through the counseling session, your case will be dismissed. This is very important because if you file for bankruptcy — even if it doesn’t go through — the filing will still be on your credit report for 10 years.
You should also be aware that there are two types of bankruptcy for individuals filing, Chapter 7 and Chapter 13. Here’s what they mean:
Chapter 7 bankruptcy
This wipes out your debt, but only certain filers will qualify for this based on income, state laws, equity in your home and a number of other factors. Some debts will not be dismissed such as student loans or back taxes.
Chapter 13 bankruptcy
This is a structured repayment of your debts. The repayment usually happens in a 3 to 5 year period. Be aware that in some states your wages will automatically be garnished.
If you are going to file for bankruptcy, here are a few of the steps you will need to take:
- Find a reputable bankruptcy attorney. Contact your local Bar Association for a recommendation. It is possible to file on your own, but it’s not recommended because bankruptcy is a very complicated process. Also, be aware that in addition to the cost of filing for bankruptcy there will also be attorney’s fees. Make sure you know ALL of the fees in advance.
- Go through the required credit counseling session (Advantage CCS provides this) and obtain your required certificate of completion.
- Go to court. After filing, your creditors will look at your situation, process your paperwork, and have a meeting to determine how to handle your debts. You will have to go to court and testify.
- Take a bankruptcy education class (required). After your court appearance, you have 45 days, as required by law, to complete a bankruptcy education class and get your certificate of completion to your attorney. Then your bankruptcy can finally be discharged.
There are additional parts of the bankruptcy process. For instance, you will have to sign what is called a “Reaffirmation Agreement” to maintain possession of things like your home or vehicles. This agreement says you will continue to make your payments. The act of filing also gives you an automatic stay on foreclosures, evictions, enforcement of alimony and some other legal actions.
What happens BEFORE you file for bankruptcy? –
Before Filing, You’ll Need A Bankruptcy Counseling Session!
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, a piece of legislation passed by the 109th United States Congress, is a 512-page document. If you’re thinking of declaring bankruptcy, it’s the last document you have time to read. However, you should be aware of its major points.
The new law makes it more difficult for consumers struggling with debt management to file a Chapter 7 bankruptcy, which allows debt forgiveness and discharge. Consumers are now more likely to file Chapter 13 bankruptcies, which require them to pay back all debts owed, usually through a debt management plan. The law also requires consumers to complete bankruptcy education sessions — often coupled with credit counseling — prior to filing. Consumers must demonstrate a certificate of bankruptcy counseling completion prior to filing, as well.
Advantage CCS offers online bankruptcy education classes to help consumers objectively assess their debt-to-income ratios; their debt management plans and styles, and the pros and cons of declaring bankruptcy. That last action should not be taken carelessly – filing is a major negative mark on a person’s credit score and financial history. The 2005 legislation was designed in part to protect consumers from making such rash decisions.
Wherever you live, you can enroll in online bankruptcy classes. Advantage CCS also offers these classes in-person at our Pittsburgh, Pennsylvania headquarters. Completing class requirements is similar to completing requirements for a high school or college course you might have taken: you will read the material, you will take quizzes, and you will complete a final test at the conclusion of the course.
Bankruptcy education is a necessary first step in filing for bankruptcy. Upon completion, you will be fully equipped to make some important decisions about your financial future. More importantly, you will have a better understanding of your debt, your finances, and your personal debt management style. Because your financial records are closely scrutinized so our counselors can determine how you got into financial trouble, you will be able to determine what debt management mistakes you are making; and develop a concrete plan for getting out of debt.
What happens AFTER you file for bankruptcy? –
After Filing, You’ll Need A Bankruptcy Education Class!
If you proceed with bankruptcy, the law dictates that you must complete a bankruptcy education class prior to your debts being discharged by the court. Advantage CCS is certified by the Executive Office of the United States Trustees (EOUST) to provide the pre-discharge bankruptcy education class over the telephone, in-person at one of our 10 locations, or online 24/7 from the comfort of your own home.
In order to enroll in the Advantage CCS bankruptcy education class, you must have a certificate of completion for the required pre-filing bankruptcy counseling session. The bankruptcy education class will help you create a budget, teach you money management techniques, and show you how to use credit wisely in the future.
Our bankruptcy education class is available online in every US state, except for Alabama and North Carolina. We also have 10 office locations in eastern, central, and western Pennsylvania for on-site classes. The fee for the bankruptcy education class is $25. If you are filing for bankruptcy as a married couple, each spouse must complete the class individually and receive their own certificate of completion.
Declaring bankruptcy is a huge financial step, but if a string of problems has left you mired in debt, it may be the right step to get you back on track. However, if used inappropriately, you could end up in a worse financial situation than if you had tried to solve your problems through less extreme measures such as credit counseling and a Debt Management Program.
Consider and pursue all bankruptcy alternatives first. Then, if you do decide to declare bankruptcy, time it correctly to get the most debt wiped out via the process.
Let Advantage CCS help you through the difficult process of getting out of debt and getting your finances back on track. Our certified credit counselors can provide you with the required pre-filing bankruptcy counseling session, the pre-discharge education classes, issue your certificates of completion for both, and help you get your life back.