What is bankruptcy counseling, and why is it required?

NJ Bankruptcy Law FAQ

Q) What is bankruptcy counseling, and why is it required?

A) As a result of recent amendments to the Federal Bankruptcy law, any individual who is seeking to file for Chapter 7 or Chapter 13 bankruptcy must attend a bankruptcy counseling session. The session lasts for about ninety (90) minutes and provides an overview of the bankruptcy process. It is permissible for this session to take place over the phone or over the internet. Upon the completion of the session, you are provided with a Certificate of Completion. The pre-filing counseling session will allow individuals to fully understand the potential advantages, disadvantages and alternative to filing for bankruptcy.

Before bankruptcy is finalized and your debts can be discharged you will also be required to complete a pre-discharge financial education course. The pre-discharge course is approximately two (2) hours in duration, addresses financial issues and attempts to provide you with the necessary knowledge and skills to prevent future financial problems. What is discussed in detail are such issues as rebuilding your finances subsequent to a bankruptcy, the importance of establishing and following a budget, understanding the use of credit and predatory lending and more. Subsequent to completing the pre-discharge education you will receive a Certificate of Completion. This Certificate must be filed with the Bankruptcy Court in order to have your debts discharged.

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