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Why Credit Counseling for Chapter 7 Bankruptcy Is Mandatory

Credit Counseling for Chapter 7 Bankruptcy

Chapter 7 bankruptcy is one way to free yourself from the weight of unmanageable debt. It can eradicate your loans and offer you a new financial start. But the benefits of Chapter 7 bankruptcy are outweighed by its challenges for a lot of families. Because of the serious and complicated nature of this choice, credit counseling for Chapter 7 bankruptcy is not only required by the U.S. government but also beneficial for all participants.

Why is Credit Counseling Required?

Anyone who is considering filing for bankruptcy would benefit from the guidance of a certified credit counselor. You can only make an appointment with an agency approved by the US Trustees Office, which ensures that you meet with a qualified professional who understands the different aspects of this decision. A counselor will help you to create a budget that maximizes your income, while highlighting the best options for repaying your debt. Deciding to declare bankruptcy can be a stressful and emotional decision -- it’s important to have a complete understanding of the process and what your options are.

What Can You Gain From Credit Counseling?

Credit counseling is meant to supply you with the best information possible to make an informed decision. Despite the advantages of canceling your debt, Chapter 7 bankruptcy or “liquidation bankruptcy” may lead the court to liquidate some or all of your assets as a means to pay back creditors. Filing Chapter 7 bankruptcy will also stay on your credit report for 10 years, making it nearly impossible to receive loan for a car or a home. A counselor, who usually works in a nonprofit setting, can help you to weigh the advantages and disadvantages of this choice. They can also offer you words of support about your financial situation, bringing complementary or alternative methods of debt relief to your attention.

The Next Steps

Most credit counselors charge a fee for their services. If cost is an important concern for you and your family, ask to pay on a sliding scale, which can range based on your need. Know that whatever you decide, you are not alone. If you feel unsure after your credit counseling for Chapter 7 bankruptcy, reach back out for further support and clarification. Learning more will empower you to take the steps toward financial freedom from a place of awareness and hope.

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