Five Things You Need to Know About Bankruptcy

1. “What types of bankruptcy are available to individuals?”

Chapter 7 liquidation is designed for debtors suffering financial difficulty that do not have the ability to pay their existing debts. The purpose is to obtain a discharge (i.e. elimination) of their existing debts.

Chapter 13 repayment is designed for consumers with regular income who are temporarily unable to pay their debts but would like to pay them in installments over a period of time. The bankruptcy courts will approve a repayment plan that will repay their debts in no more than five years. 

2. “What are the steps to filing for personal bankruptcy?”

When filing for personal bankruptcy, there are a few steps you are required to take under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. First, get a bankruptcy-counseling certificate.  With counseling, consumers are educated about the bankruptcy process. 

After you have filed bankruptcy, you’ll need to get a bankruptcy education certificate. Consumers are required to obtain a bankruptcy education certificate, after completing “an instructional course concerning personal financial management.” This education is meant to help you prevent additional and future financial difficulties.  

3. “How long will bankruptcy affect me?”

While bankruptcy does serve to help you obtain a fresh start with your debts, there are some ramifications to filing for bankruptcy. For example, Chapter 7 bankruptcy remains on your credit report for ten years, although that does not necessarily mean you won’t be approved for any credit before then.

4. “How do I get a bankruptcy counseling certificate?”

Obtaining a bankruptcy counseling certificate is now a prerequisite to filing for personal bankruptcy under the Bankruptcy Abuse Prevention and Consumer Protection Act. This requirement is to help ensure that consumers are educated about the bankruptcy process. Money Management International is a qualified bankruptcy counseling agency.

5. “How do I get a bankruptcy education certificate?”

To get a bankruptcy education certificate, you’ll need to take a debtor education course by an approved provider. This educational course will help you with managing your money, creating and maintaining a budget, and using credit appropriately.