While it can be slightly embarrassing to go through a proceeding like filing for Chapter 7 bankruptcy protection, sometimes it is a necessary evil that just needs to be taken care of. No one likes to admit that they are heavily into debt and can't pay their bills. Unfortunately, people just need help sometimes to get out of their dire financial straits, and the only way to do so is by filing for personal bankruptcy.
If a person is completely incapable of paying money to any of the creditors that they owe, it will be necessary for them to apply for Chapter 7 bankruptcy. Chapter 7 liquidates all of a person's assets so creditors can get the money that they are entitled to. This usually means items like a house, car, and/or boat are all eligible items that are available for instant liquidation if the court deems it necessary to do so. You could, potentially, find yourself out of a home if you are that far into debt. This can be a scary proposition, but it is one that is necessary so all of the harassing phone calls and letters through the mail stop.
Part of filing for bankruptcy is the required counseling services that are assigned to a person before the process is able to be completed. Chapter 7 and Chapter 13 are both forms of personal bankruptcy that can be filed, but the type of counseling received is slightly different. This is due to the fact that people filing Chapter 13 are usually not as financially impaired as those who are forced into Chapter 7. There is a payment plan to creditors associated with Chapter 13, so a different kind of counseling is necessary compared to the person that is so far in debt that their assets need to be sold immediately in order for their bills to be paid off.
Just by filing for bankruptcy, you are agreeing to credit counseling that is assigned by the court overseeing your case. The credit counseling agencies are usually those that the courts have worked with before to establish guidelines as to what they expect the person to understand once they are done with their counseling sessions. Before the legal proceedings involved with bankruptcy are able to move forward, the court will need to see that you attended credit counseling and are making a concerted effort to implement the lessons that you have learned from your sessions with your counselor.
In their most basic forms, credit counselors are advisors as to what your options are going to be once you file for and get approved for Chapter 7 bankruptcy protection. The job of a credit counselor is not to talk you out of filing for bankruptcy, but they are there to discuss other potential options with you so that you don't have to go through everything associated with applying for bankruptcy. A credit counselor will also make known exactly what your priorities are going to be once you file, and they will make sure that you understand the procedures that are involved with a traditional Chapter 7 filing.
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If you live in Alabama, Florida, Missouri, New York or Wyoming, please click here for additional information.
By an Act of Congress and the President of the United States, we are a federal Debt Relief Agency. Attorneys and/or law firms promoted through this Web site are also federally designated Debt Relief Agencies. They help people file for relief under the U.S. Bankruptcy Code. Disclosures Required Under the U.S. Bankruptcy Code.