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What is required before filing for bankruptcy & discharging debt?

When New York consumers are struggling under crushing amounts of debt, it can feel as if there is no way out. Dealing with the harassment of bill collectors or problems related to wage garnishments can make the situation even worse for those already worried about how to make ends meet. Many consumers and families would benefit from a greater understanding of personal bankruptcy, a very valuable debt relief tool which can stop foreclosure or result in more manageable payments.

When consumers realize the benefits of bankruptcy, the first question on their minds is often related to what is required to file for bankruptcy. All consumers need to understand that before filing for bankruptcy and discharging any debts, they must go through credit counseling and complete a debtor education course. Although these requirements may seem rather straightforward, there are specific guidelines for the credit counseling and the debtor education course.

In order to qualify a person to file for bankruptcy or discharge debts, the credit counseling and debtor education course must be approved by the U.S. Trustee Program, which is operated through the Department of Justice. Consumers searching for an approved provider should check the list maintained by the Trustee Program in order to ensure that the program/organization they are considering is approved.

Although consumers may want to complete these requirements as quickly as possible, the bankruptcy rules stipulate that that a consumer filing for bankruptcy cannot complete credit counseling and the debtor education course simultaneously. Prior to filing for bankruptcy, the potential filer must complete credit counseling; after filing, but prior to the discharge of debts, the filer must finish the education course for debtors. Consumers obtaining bankruptcy protection must also obtain a certificate from the organization providing the counseling or education program as proof that they fulfilled this requirement.

Source: Federal Trade Commission, "Filing for Bankruptcy: What to Know," accessed Nov. 1, 2014

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