Debt can be all-consuming, making it incredibly difficult to keep up with financial obligations. It’s only natural for debtors that their sights set to filing for either Chapter 7 or Chapter 13 bankruptcy. Be aware that, for debtors, Chapter 7 is the most widely used filing, and not just anybody can file. There are many standards that debtors must meet to qualify for Chapter 7. Whether debtors choose to file for Chapter 7 or Chapter 13, they must first undergo debt counseling. For many, bankruptcy may feel inevitable; however, attending debt counseling is imperative to ensure that alternatives have been reviewed. It’s important to understand the purpose of debt counseling and carefully prepare for the first session. Debt counseling is imperative for many reasons, and when undergoing the process, it’s essential to choose the right agency to represent you. In the meantime, turn to the support of a bankruptcy lawyer to provide the legal guidance needed during this incredibly complicated and stressful process. 


Qualifying for Chapter 7

While there are several types of filings to choose from, Chapter 7 is among the most popular. However, it’s essential to be aware that to qualify for Chapter 7, specific requirements must first be met. Requirements include:


  • Debtors must pass the means test in their state
  • Debtors must attend debt counseling at least 180 days before the bankruptcy discharge
  • Debtors must not have had a bankruptcy dismissal in the past 180 days
  • Debtors must be an individual, married, or a sole proprietor


If a debtor doesn’t meet the qualifications for Chapter 7 bankruptcy, don’t despair, there are other options available. For debtors struggling with debt or considering bankruptcy, it’s best to start with an experienced bankruptcy lawyer’s counsel to determine the best path for freeing themselves from debt. 


What is Debt Counseling?

One of the most critical components to qualifying for Chapter 7 is to engage in debt counseling at least 180 days before the bankruptcy discharge. Many may find it challenging to endure this process because they believe they already qualify. However, it will be imperative to attend debt counseling to ensure that bankruptcy is the most appropriate option. To file for bankruptcy, two sessions of debt counseling is required. Debt counseling is a critical component to bankruptcy as trained professionals will work to review the debtors’ financial situation and work with you to determine whether there are alternatives to filing for bankruptcy. Your full participation is required during the 60-minute session. However, it’s essential to know that debtors are not required to accept any debt counselor’s proposals. To ensure that your session is as efficient as possible, debtors should come prepared with the following financial information:


  • Child Care Expenses
  • Mortgage Payments
  • All Debts Owed (Credit Cards, Student Loans, Etc)
  • Documentation of Income
  • Information on Retirement Accounts


With the above information, credit counselors will work closely with debtors to develop a budget and determine the options available to manage debt. 


Debt Counseling is Important

For many who have determined that bankruptcy is the most viable option, debt counseling can feel cumbersome. However, the process is imperative. For those considering bankruptcy, it’s vital to ensure that all possible options have been explored. Debt counseling will play a crucial role in reviewing the debtors’ finances and determining whether there are any alternatives to filing for bankruptcy. 


While debtors are not required to move forward with recommendations from debt counselors, in some situations, options provided may be a way for debtors to avoid filing for bankruptcy. However, when bankruptcy is the only viable option, the most appropriate step is to reach out to an experienced bankruptcy lawyer to guide how best to move forward. 

For more information, call Allmand Law Firm, PLLC.