Godfrey Law Logo

(801) 621-7445

Call for a FREE consultation!

What you need to know about Pre-Credit Counseling and Chapter 7 of Bankruptcy Law?

Bankruptcy Law

Chapter 7 Bankruptcy can clean up all kinds of overwhelming debts under federal court protection. But before filing for bankruptcy, you must be confident that it is the right option to consider. 

What is Pre-Credit Counseling in Bankruptcy?

It is also called the pre-bankruptcy course, which aims to help you make a firm decision if filing for bankruptcy is the right choice for you. It is where a finance counselor guides you in assessing your financial standing and helps you understand the implications of bankruptcy to your debts, assets, and income. Even if the loan’s repayment is not feasible in your situation, it is still required to take this course as a prerequisite for bankruptcy. 

Are you required to undergo Credit and Debt Counseling to Chapter 7 of the Bankruptcy Law?

Under Federal Law, whether you file for Chapter 7 or Chapter 13, you must attend this course. Still, it does not mean that you have to follow everything the finance counselor or agency tells you to do. It complies with filling out the bankruptcy forms and proof that you already took this course and have considered all options. You’re sure that filing for bankruptcy is the right choice. 

What are the debts that cannot be eliminated in Chapter 7?

Child Support and Alimony

Child Support and Alimony are considered priority debts and receive special treatment in handling this matter. Priority debts are nondischargeable, which means they are not wiped out in any Bankruptcy Law areas.

Recent Tax Obligations and other Government Liabilities

There are instances that this kind of debt can be wiped out under certain circumstances only if it is an income tax debt. Other than that, such as fines/penalties, you need to pay it to the federal government.

Student Loans

It is dependent on the court ruling. You have to submit a shred of substantial evidence that paying off your student loans will incur due financial hardship and be deemed to be justifiable and reasonable.

Who qualifies for Chapter 7 of Bankruptcy Law?

There are specific tests to determine if you qualify to file for Bankruptcy under Chapter 7, called “the means tests.”  Comparing median income and your monthly income is a deciding factor.  Median pay means a relevant income of the same household size in your state. Your current income would mean your average income in the last six months. So, if your current income is higher than the median income, then you’re not eligible for that. But, if your monthly payment is lesser than the median income, then you’re good to go for Chapter 7. 

Seek Professional Help from Ogden’s Bankruptcy Lawyer

Bankruptcy is a complex legal process that entails a lot of reflection and stress. Suppose you are still unsure whether or not bankruptcy is the right choice for you to consider. Get professional help from Godfrey Law, located right here in Ogden, Utah. We at Godfrey are here to listen and provide you with the best possible solution for you. You can call us at 801-621-7445, or you can set an appointment through our website.