You also have to complete a debtor education course before your debts can be discharged.
What is Bankruptcy?
Trustee Program approves organizations to provide the credit counseling and debtor education required for anyone filing for personal bankrutpcy. Only the counselors and educators that appear on the U. By law, the U.
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Trustee Program does not operate in Alabama and North Carolina; in these states, court officials called Bankruptcy Administrators approve pre-bankruptcy credit counseling organizations and pre-discharge debtor education course providers. Pre-bankruptcy credit counseling and pre-discharge debtor education may not be provided at the same time. Credit counseling must take place before you file for bankruptcy; debtor education must take place after you file. You must file a certificate of credit counseling completion when you file for bankruptcy, and evidence of completion of debtor education after you file for bankruptcy — but before your debts are discharged.
Frequently Asked Bankruptcy Questions (FAQ)
Only credit counseling organizations and debtor education course providers that have been approved by the U. Trustee Program may issue these certificates.
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To protect against fraud, the certificates are numbered, and produced through a central automated system. A pre-bankruptcy counseling session with an approved credit counseling organization should include an evaluation of your personal financial situation, a discussion of alternatives to bankruptcy, and a personal budget plan. A typical counseling session should last about 60 to 90 minutes, and can take place in person, on the phone, or online.
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Otherwise, you may be charged a fee for the counseling. The counseling organization must discuss any fees with you before you start the counseling session.
Once you complete the required counseling, you must get a certificate as proof. Check the U.
Credit counseling organizations may not charge an extra fee for the certificate. A debtor education course by an approved provider should include information on developing a budget, managing money, and using credit wisely. You will need to show your trustee a valuation on your house and a recent mortgage statement.
If your house is worth less than your mortgage but you want to remain in your home, you usually can as long as your mortgage payments are kept current. You will have to pay the trustee for any equity you have in your house however you do not have to pay everything up front.
You can make payments over the term of your bankruptcy. If you need longer to pay you can also consider filing a consumer proposal which will allow you to make payments for up to 5 years. Bankruptcy stops creditor collection actions. If your mortgage or car loan are in arrears, these secured creditors can still pursue you for payment and take possession of your house or car. However filing bankruptcy may deal with your other debts allowing you to catch up on these payments before this happens.
You can be discharged in as short as 9 months.
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A second time filer with surplus income will be in bankruptcy for 36 months. Your debts go away once you are discharged. You must complete your duties including submitting proof of income each month, attending two credit counselling sessions and making the required payments but once you do you will be discharged from all of your debts included in your bankruptcy.
Bankruptcy will affect your credit rating. A first bankruptcy is on your report for 6 years after discharge. However your credit rating is probably already poor today and will not improve unless you take action to do something about your debts. We will also show you ways to purchase items where you need credit, like obtaining a secured or prepaid credit card, or using a Visa debt card. There are other options available. Bankruptcy may or may not be the best option for you. There are alternatives to bankruptcy like making a consumer proposal to your creditors.