Many of the Hackettstown residents who come to us here at our offices here at Jonathan Stone Attorney at Law are initially only concerned about what form of personal bankruptcy they should file: Chapter 7 or 13? Yet we counsel them that before they start getting too deep into their plans, they should first seek credit counseling. Like them, you might assume that this is something that we recommend to clients. Yet again like them, you might be surprised to learn that this is not a recommendation; rather, it is a requirement under federal law.
Per the U.S. Bankruptcy Code (as shared by the Cornell Law School), no debtor may file for bankruptcy without first having gone through credit counseling within the previous 180 days. You must meet with the credit counselor and create a budget that would allow you to pay off your current debts. Your income and the other assets available to you are secondary in this evaluation because its main purpose is to see if it feasible for you to pay off all your liabilities on your own. Once that budget has been established, you must include it in the paperwork you file with the court in your bankruptcy case.
However, even in the event that the credit counselor believes you can repay your debts without bankruptcy, you are not forced to follow his or her plan if you still believe it to be disadvantageous to you. Furthermore, the only consideration the court gives the plan is to help determine whether you qualify for Chapter 7. If it shows repaying your debts is possible, the court will then simply recommend to you file under Chapter 13.
More information on preparing for personal bankruptcy can be found here on our site.