One of the first steps to discharging your debts through a Chapter 13 bankruptcy and making a fresh financial start is to go through credit counseling. By law, you must complete two rounds of credit counseling for your bankruptcy process to be valid. A failure to complete either one could result in your New Jersey bankruptcy judge throwing your case out.
As Nerdwallet explains, your first session of credit counseling takes place before you file for bankruptcy. The session is intended to give you the rundown of the pros and cons of filing bankruptcy. The session will also educate you on alternative means of handling debt other than bankruptcy, though in reality by this point many people who take the credit counseling session are very likely to go ahead and declare bankruptcy.
Once you have completed this first session, you will receive a certificate of completion. This certification will last for the next 180 days. In the event you decide that filing for Chapter 13 bankruptcy is inevitable, you must present this certificate to a bankruptcy court showing that you have finished pre-bankruptcy counseling.
The second session of credit counseling comes just before the bankruptcy court discharges your debts. This session will educate you on how you can better manage your finances, save money and avoid debt in the future. Other topics of discussion will include your credit score and how to steer clear of financial risks. As with the completion of the first counseling session, you will receive a certificate that proves you finished the pre-discharge round of counseling. This certificate will have to be presented to the court for your debts to be discharged.
Credit counseling sessions are not complicated. They do not take long, ranging from about ninety minutes to two hours. Generally, you can expect to pay a fee for the counseling, perhaps $25 to $50 per session, but you might be able to find counseling for free if your budget is too strapped. Since credit counseling sessions are essential parts of your bankruptcy process, it is worth the effort you put in to complete them.
Keep in mind that this article does not convey legal advice. It is written to educate readers on the topic of bankruptcy.