Kademenos, Wisehart, Hines & Lynch Co., L.P.A.
(740) 363-4878
94 N. Sandusky Street Suite 102
Delaware, OH, 43015
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Financial Counseling Before Bankruptcy

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Finances Spelled Out With Scrabble LettersIf you have reached a point where you are in such financial straits that bankruptcy seems to be the only option then you are likely extremely stressed and confused about the process and steps you should take to achieve financial security.

Filing for bankruptcy can be a complex process, particularly if you have a higher  level of income or any significant assets, and as Ohio bankruptcy attorneys we understand how many questions will arise along the way.  One aspect of filing for bankruptcy we think it is important to know is the requirement to undergo financial counseling and education during the bankruptcy process.

Federal law requires that you go through credit counseling and debtor education if you need to file for bankruptcy.  These are split up in two separate counseling sessions, and the requirement is the same whether you file for Chapter 7 or Chapter 13.

According to a helpful legal guide from Avvo, the first step toward bankruptcy is the credit counseling session, which must be taken no more than180 days before filing for bankruptcy.   This session is pretty short, lasting only 60 to 90 minutes.

During credit counseling, you and your counselor will go over your finances and discuss your best options.  The session will likely cover:

  • The bankruptcy process and what it can do for you
  • The advantages and disadvantages of filing
  • Possible alternatives to filing bankruptcy
  • An analysis of your current financial situation and budget
  • Setting up a workable repayment plan, if repayment of the debt is feasible in your situation
  • A discussion about the circumstances which brought about the need for financial counseling

In some cases, this session may be able to help you avoid bankruptcy completely.  You have the option of taking this counseling session in person, online, or by phone.  When all is said and done, you will receive a certificate of completion to include in your bankruptcy filing.  Some attorneys include the cost for this counseling in their overall fee structure and others don’t. It is always wise to ask the attorney what, exactly, his or her fees cover (i.e. court’s filing fee, credit counseling, credit reports, attorney fees) and how much will be due up-front. Most Chapter 7 bankruptcy attorneys expect to receive all or most of the fees up-front, whereas in a Chapter 13 bankruptcy a portion of the legal fees can be paid through the Chapter 13 plan along with the other debt.

The debtor education requirement is important because, although bankruptcy can help you get a fresh start, if you continue to make poor financial decisions then you will be in the same boat again. The debtor education requirement is important because, although bankruptcy can help you get a fresh start, financial difficulties are only “fixed” if one of two things occurs – either income increases, or expenses decrease. The content in the second required course assists the participant in becoming more financially literate and covers topics like budgeting, want versus need, rebuilding your credit post-bankruptcy, planning for future financial contingencies, and how to use credit wisely moving forward.

The session must take place within 60 days after your first meeting with creditors (Chapter 7) or before your last planned payment (Chapter 13).

If you have questions about Ohio bankruptcy or the steps leading to it, don’t hesitate to contact the Ohio Local Lawyers at Calhoun, Kademenos, & Childress.

Photo Credit: LendingMemo via Compfight cc

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About Adrienne Hines

Adrienne Hines is an attorney at Kademenos, Wisehart, Hines & Lynch Co., L.P.A.. She joined the firm in 1996 and was promoted to Partner in 2006. Ms. Hines is licensed to practice law in Ohio and in the Federal Court. She has been certified as a Workers’ Compensation Specialist by the Ohio Supreme Court, earning her a unique distinction among her peers. Ms. Hines is currently a member of the Ohio State Bar Association, Toledo Bar Association, and Erie County Bar Association. She focuses her practice in the areas of Bankruptcy, Ohio Workers Compensation, and Social Security Disability.Adrienne Hines' Google+ Profile

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