new bankrupt

Not long ago, the United States Congress passed an overhaul of the Federal bankruptcy statues under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which went into effect in October of that year. One of the new requirements that came out of the new act, was a mandate that everyone filing for bankruptcy would be required to attend authorized 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 bankruptcy 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 filing for bankruptcy. 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 bankruptcy leads to with regard to their credit score and long-term ramifications, and to investigate available alternatives to the drastic decision to file.

One aspect of the pre-filing bankruptcy classes is doing a complete budget analysis with the counselor. This is done one-on-one and at this time, the debtor and counselor look carefully at all of the financial aspects, including the earning level of the individual or couple, the debt load they have and their monthly obligations. With this information, they also consider if there are any alternative options to filing for bankruptcy.

As part of the counseling, instruction will be given on the differences between filing Chapter 7 bankruptcy and filing Chapter 13 bankruptcy. As well, an overview of both the advantages of filing for bankruptcy 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 bankruptcy claim form and file it with the court and when the bankruptcy is discharged. A bankruptcy is not considered complete, and the debts are not eliminated, until the bankruptcy is discharged by the court. The discharge of the bankruptcy 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, a bankruptcy 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.

Bankruptcy classes must be taken from an approved institution in order to receive the properly authorized completion certificates. Different organizations charge different amounts for the classes and range anywhere from $50 per class, to $150 per class for each participant. Most of these companies offer the classes online, over the telephone or on-site, so that it is easy for people to find the most convenient way of taking them.