A debtor considering bankruptcy must bear in mind that a bankruptcy stays on his or her credit report for up to 10 years, which can potentially make it difficult to get future credit. A debtor should also keep in mind that some debts must still be paid even if he or she files for bankruptcy. Accordingly, it is essential to contact an experienced bankruptcy attorney before making potentially life-altering financial decisions.
Learn More About Bankruptcy Before Deciding to File
According to the Administrative Office of the U.S. Courts, almost 9,000 individuals filed a non-business-related bankruptcy petition in 2008 in Central Illinois alone.
Thus, if you are considering bankruptcy as a solution to a debt crisis, you are not alone.
It is critically important to learn as much as possible about the bankruptcy process before making the final decision to file a Chapter 7 or Chapter 13 bankruptcy petition.
For that reason, the Springfield, Illinois, law firm of Michael J. Logan, Ltd., offers the following general information about consumer bankruptcy filings. We also offer to anyone considering bankruptcy the opportunity to receive a free and confidential case assessment from experienced bankruptcy lawyer Michael J. Logan. Simply complete the detailed intake form and you will receive information from attorney Logan by telephone or e-mail.
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Located in Springfield, Illinois, the law firm of Michael J. Logan, Ltd., offers compassionate and knowledgeable legal guidance in the area of bankruptcy law to individuals and families throughout Central Illinois. Our clients come to us from communities like Chatham, Lincoln, Cass County, and DeWitt County. Complete our complimentary and confidential case assessment or contact us directly to schedule a free consultation.
For more than 35 years, local Illinois attorney Michael J. Logan has provided knowledgeable and practical legal advice to individuals and families considering filing for bankruptcy. Our law firm has helped thousands of clients use a Chapter 7 or Chapter 13 bankruptcy petition to get a fresh financial start. Contact us directly or complete a confidential case assessment for more information.
Credit Counseling Requirement in Bankruptcy
In 2005, Congress passed and the president signed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), a bankruptcy reform law. One of the new requirements BAPCPA imposes on a new bankruptcy debtor is to receive credit counseling from an approved credit counseling agency before the bankruptcy filing. A bankruptcy lawyer experienced in consumer credit law, like one from Michael J. Logan, Ltd. in Springfield, Illinois, can help debtors determine whether bankruptcy is the appropriate course of action for them and can advise them about these new counseling requirements.
Credit Counseling Briefing
Specifically, a debtor must receive an "individual or group briefing" from a nonprofit budget and credit counseling agency within 180 days before filing for bankruptcy. The briefing can be in person, by telephone or via the Internet. The law provides that the briefing must "[outline] the opportunities for available credit counseling and [assist] such individual in performing a related budget analysis." If a debt management plan is developed in the course of the required counseling, it must be filed with the bankruptcy court.
Approved Credit Counseling Agencies
In most states, the US trustee maintains a list of approved credit counseling agencies for use in the court districts in those states. In Alabama and North Carolina, this list is approved by bankruptcy administrators. The list of approved agencies is available on the US courts Web site. An approved agency is first on the list for a six-month probationary period, renewable in one-year increments. Approval can be revoked at any time. Interested persons can ask the court to review the approval of any agency.
To obtain approval, an agency must have qualified, experienced counselors who provide adequate counseling and have no financial interest in the counseling outcome; handle client funds securely; maintain an independent board of directors; charge reasonable and sliding scale fees; make certain disclosures; possess financial security to oversee repayment plans of clients; and maintain "quality, effectiveness, and financial security of the services it provides."
Exceptions to the Credit Counseling Requirement
There are some exceptions to the counseling requirement for certain debtors in particular situations. First, the court may waive the counseling requirement if there are "exigent circumstances" and the debtor made a request for counseling that an agency was unable to provide within five days. Second, a debtor is excused from the requirement if incapacitated by mental illness or deficiency, if physically impaired such that he or she is unable to participate with reasonable effort or if on active military duty in a combat zone. Third, counseling is not required if the trustee or administrator in a particular court district determines there are not enough approved credit counseling agencies available.
Criticisms of the Requirement
The credit counseling requirement has many critics. One argument is that it is too little and too late for a debtor in bad enough financial shape to be on the brink of bankruptcy. Supporters of the requirement feel that it will weed out people who are in financial crisis because of their own voluntary behavior; however, counseling agencies have found that most people counseled have had legitimate problems not caused by their own recklessness. Dismissal of a bankruptcy case for not obtaining required counseling is seen by some as harsh treatment for a debtor facing, for example, foreclosure on a modest home. Finally, depending on the interpretation of the judge, the dismissal could weaken the automatic stay in a subsequent bankruptcy filing.
Conclusion
Consumers considering bankruptcy as a future option should investigate the credit counseling requirement well before the anticipated bankruptcy filing. The experienced consumer and bankruptcy law attorneys at Michael J. Logan, Ltd. in Springfield, Illinois, can be just the counselors and zealous advocates such a consumer needs in trying economic times.
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