Bankruptcy can be a beneficial tool when you utilize it properly. Also, in order to reap the benefits, you must complete all necessary aspects of the process.
Therefore, it can be helpful to understand the key aspects of the bankruptcy process before you begin. There are certain financial requirements in particular that you must meet before, during and after filing for bankruptcy.
Before filing for bankruptcy, you must complete a credit counseling course. This course must be through an approved credit counseling agency, and you must submit the certificate of completion with your bankruptcy application. The course completion and filing must be within six months of each other. There are certain instances where you may not have to complete the counseling course:
- Military personnel in active war zones
- Those mentally or physically unable
- Those who petition to complete the course after filing
In all cases, the bankruptcy court must approve of the pardon.
If you desire to file for Chapter 7 bankruptcy, the means test is a requirement. The first step is to compare your average income over the past six months with the average income in the state. If your income falls under the average, no further calculations are necessary, and you may file for Chapter 7. On the other hand, if your income is higher than the average, you must submit additional information for further consideration. Depending upon the final numbers, you may still qualify for Chapter 7 or have to file for Chapter 13.
Financial management course
In order to encourage filers to budget better and prevent bankruptcy in the future, you must complete a debtor education course before receiving a full bankruptcy discharge. This course covers income responsibility, budgeting and other financial tools. Upon completion, you must submit the debtor education certificate to the court.
Along with understanding the requirements that you must complete, it is important to make sure you fulfill each one by completing all paperwork and submitting any additional material. Doing so may aid in avoiding a bankruptcy denial or cancellation.