In order to prevent a person from sinking into Bankruptcy once again, the US bankruptcy code requires that every debtor, who files for bankruptcy, should have “Debtor Education Courses.” These classes would make the already indebted debtor pay for additional services. Then again, these classes are important as they are designed to help the individual recover from his debts. This is essentially what the idea of bankruptcy is about, to help unfortunate debtors, who are immersed in liability, to start anew.
Debtor Education is composed of financial courses done by non-profit organizations like a credit counseling service. Organizations who seek to conduct debtor educations courses must obtain approval from the U.S. Trustee Program. Only classes conducted by organizations found in the U.S. Trustee Program list are honored by the court. They are also the only ones allowed to advertise that they are one such company. There are a couple of states (Alabama and North Carolina), however, where there is no trustee program and it is the responsibility of Bankruptcy Administrators to approve Debtor Education course providers.i
It has two phases; one is Pre-Bankruptcy Credit Counseling, taken within 180 days before bankruptcy papers are filed and a Post-Filing Debtor Education Course taken before discharge is granted by the Bankruptcy Court. A certificate is given to the debtor as proof by the end of each class.
Pre-Bankruptcy Credit Counseling
Before you will be allowed to file for bankruptcy, the debtor is required to consult a certified credit counselor who will sit down and talk about your options with you. You must be able to communicate to the counselor your remaining assets, income, lists of liabilities or any information that can help in deciding whether bankruptcy is a good decision for you. It is also important to note that the credit counselor role is merely to help you become clarified about what you want to do and to help you make a decision with what YOU think is best for you. The credit counselor will not or should not, under any circumstances, tell you what to do.
Under pre-bankruptcy credit counseling, the following topics are discussed, Budget counseling or Financial Literacy, Credit/Debt Management, Housing and Bankruptcy counseling. If credit counseling is successful, you will be able to decide whether you should proceed with filing for Bankruptcy and if you should proceed, under what chapter of the bankruptcy code you should file it under.
Post-Filing Debtor Education Course
Before Bankruptcy is granted, a special debtor education course is once again mandated by the Bankruptcy court. This education course helps you recover from bankruptcy. Each class, about 1 to 3 hours long, will tackle topics about Computing your Net Worth, Preparing a Budget, Setting and reaching your Financial Goals, Money Management, Ways to cut Expenses, Saving Money, Insurance, Consumer Protection and The Wise Use of Credit.v This is if you are going to be given a chance to be relieved from your debts, you better not make yourself bankrupt again.