In last week’s post, we discussed the requirements you must meet in qualifying for a Chapter 7 bankruptcy. One of them involved undergoing credit counseling. It may help you and other Eugene residents to understand how credit counseling works.

American Consumer Credit Counseling describes this as a financial service that may help you learn how to pay off your debts and avoid future debt in years to come. A significant part of your success after a bankruptcy involves understanding how to manage your finances. During credit counseling, you will work with the agency to develop an effective payment strategy for your debt and household expenses, as well as learn how to afford your expenses and pay them on time.

Credit counseling differs from debt negotiation and consolidation agencies in that the latter is often “for profit” and may be costly and damaging to your credit. Why do you need to undergo credit counseling as a requirement for bankruptcy? Bankruptcy courts want you to develop the tools to succeed and to avoid financial issues and repeat bankruptcy in the future. It may seem like an inconvenience to attend mandatory credit counseling sessions when you are already stressed and worried about your financial future; however, you may instead look at credit counseling as an invaluable opportunity to become educated and informed about managing your finances.

During a bankruptcy, credit counseling is just one of several steps you will take on your path to starting over fresh. This information should not replace the advice of a lawyer.