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Bankruptcy Law Blog

Friday, July 27, 2018

Bankruptcy Sends You Back To School

Abraham Lincoln once said, “I don't think much of a man who is not wiser today than he was yesterday.” With this mindset, Old Abe would be quite impressed by people who have gone through bankruptcy. It is not a passive process, but an active learning experience. It’s part School of Hard Knocks and part legally-mandated training.

It’s impossible to go through the bankruptcy process without learning a few things about our legal and financial systems. Filers learn a lot about how to hire and work with an attorney, what sort of information courts consider when making their decisions, and what happens to different types of debt when the debtor files for bankruptcy. It’s an enlightening experience, but the lessons aren’t something a debtor is going to be able to use again unless he or she runs into future legal trouble.

In order to make the bankruptcy process something that teaches more practical skills, Congress amended the bankruptcy law to require all people who want to file for bankruptcy to take credit counseling and debtor education courses.

The credit counseling course is basically a class on budgeting which must be completed before the debtor files for bankruptcy. The would-be filer works with a credit counselor to put together a list of all income, assets, and debts. The counselor then crafts a budget and advises the debtor whether or not it is possible to get out of debt, in a reasonable amount of time, without filing for bankruptcy.

The debtor can then decide to go ahead and file, or can attempt to work out their financial problems without filing for bankruptcy. It is up to the debtor to decide what path they want to take. The counselor can only provide advice, he or she cannot dictate the debtor’s decision.

The credit counselor can charge a reasonable fee for their services. However, if a debtor cannot afford the fee, the counselor must provide services free or at reduced rates.

Click on the following links to see the lists of Bankruptcy Administrator approved credit counselors in Northern Alabama, Middle Alabama, and Southern Alabama. Only providers on these lists should be used.

If a debtor decides to go ahead a file for bankruptcy, he or she will also be required to take a debtor education course before his or her debts are forgiven. The course providers filers with tips for creating a post-bankruptcy budget and information on how to rebuild one’s credit after going through bankruptcy. The goal is to help filers maintain a healthy balance sheet so they do not wind up in bankruptcy court again.

Click on the following links to see the lists of Bankruptcy Administrator approved debtor education course providers in Northern Alabama, Middle Alabama, and Southern Alabama. Only providers on these lists should be used.

Jumping through these educational hoops can be frustrating, but they are required by law.


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Padgett and Robertson assist clients with Bankruptcy, Personal Bankruptcy, Consumer Bankruptcy, Chapter 7 Bankruptcy, Chapter 13 Bankruptcy and The New Bankruptcy Law in Mobile, Alabama and throughout southern Alabama. Alabama State Bar Association Regulations require the following: "No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers." 11 U.S.C. 528 of the U.S. Bankruptcy Code requires the following: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”



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Alabama State Bar Association Regulations require the following: "No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers." 11 U.S.C. 528 of the U.S. Bankruptcy Code requires the following: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”