When Congress passed the new bankruptcy law in 2005, which was subsequently signed by President Bush, the goal was to deter people from filing bankruptcy. There were a few ways that they aimed to accomplish this goal: 1) encourage more Americans to seek alternatives to bankruptcy to get relief from their debts; 2) force more consumers into Chapter 13 "reorganization" bankruptcy, where the debts are paid back on a court-approved payment plan from the debtor's disposable income over three to five years; 3) make the laws stricter for qualifying altogether for bankruptcy (extending the time period between when someone can file, assuming certain debts from luxury purchases or cash advances were fraudulently accrued, etc.)

The requirement of the new bankruptcy law would fall under aim number 1 encourage more consumers to seek ways to avoid bankruptcy through debt alternatives like credit counseling, better budgeting, and debt negotiation.

What the Consumer Credit Counseling Course Entails

In order to begin the filing process for bankruptcy, a consumer must first complete a mandatory, two hour session with court approved debt counseling. The required meeting can be over the phone, in person, in a group setting, or over the Internet. The session typically costs about $50 to complete, but in the event you show a serious financial hardship, the advisors are required to waive this fee. Once the counseling is completed you will receive a certificate from the organization you did the session with. You are required to submit this documentation prior to filing.

The purpose of the meeting is to determine whether or not your situation does in fact warrant declaring bankruptcy, or if it can be better remedied through budgeting help, a debt management program, or any other alternative to bankruptcy. (The initial reaction thus far is that most people who are considering relief through bankruptcy are in fact making the right choice for their situation). This means the counselor will take an in depth look at your income, your expenses, and try to help you determine the exact nature of your debt problem. The last purpose of the session is to ensure that the consumer understand the true impact filing bankruptcy can have from a financial and credit standpoint. If the credit consultant determines that the debtor is better suited in a debt management plan, this must be included in the bankruptcy petition that is submitted to the judge before the filing is approved.

Post-Bankruptcy Financial Consultation

After a consumer has filed but before the debts are officially discharged, the debtor must complete a financial consultation session. Much like the credit counseling session, this can be done over the phone, online, one on one, or in a group setting. The aims and purpose of working with a financial consultant is to give the debtor budgeting and credit information and resources to help them in keeping their finances in order after bankruptcy. This includes information about debt and credit laws and the appropriate use of credit.

Not Sure About Bankruptcy

If you don't feel completely comfortable with some of the downsides associated with bankruptcy and would rather avoid it, just fill out a form and PayingPaul.Com will match you with a debt management company for a free, no obligation consultation. For most people, bankruptcy is a last resort, and seeing if you can find a suitable alternative won't cost a thing. Like thousands of other Americans, you can save money and get out of debt fast too!