Many Tennessee consumers have misconceptions about bankruptcy and view it as something negative. However, it can help when you’re struggling with sizable debt. When you want to file, you need a bankruptcy certificate.
The bankruptcy certificate explained
A bankruptcy certificate is something you need when you plan on filing for bankruptcy. Before you are permitted to file, you must complete certain requirements. This includes credit counseling and a debt education course. These services are available to individuals who wish to file for bankruptcy and are mandatory per the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.
How the bankruptcy certificate works
When you enter credit counseling as part of the prerequisite for bankruptcy, you meet with a counselor who thoroughly reviews your finances. They will prepare a budget based on your income and expenses and determine what options are available to you for paying off your debts to your creditors. If no other options are feasible, you will be cleared to file for bankruptcy. Once you complete credit counseling, you’ll receive a bankruptcy certificate. The certificate must be included with your paperwork when you file with the bankruptcy court.
Depending on your financial situation, you may be allowed to file for Chapter 7 or must file Chapter 13. Chapter 7 requires you to pass the means test and is appropriate for people with lower incomes who have trouble paying. When you can pay back the debt over time, you can file for Chapter 13 bankruptcy.
You will also need to complete the debt education course. The course will teach you better ways to manage your money, create a budget and properly use credit. After you have completed it, you will receive a separate bankruptcy certificate that should be filed within 60 days so that the court can discharge your debts.
You must take credit counseling and the debt educational course only from agencies approved by the U.S. Trustee Program.
Filing for bankruptcy often carries a stigma, but it could be the best decision you ever made if you’re overwhelmed by debt.