FAQs About Court-Mandated Credit Counseling
If you are thinking of filing for bankruptcy, the court will often require that you attend credit repair counseling beforehand. This is their way of ensuring that, in the future, you are able to improve your financial behavior and avoid taking on too much debt. Credit counseling can be really educational and beneficial, so it is wise to take these sessions seriously. Review the following questions and answers to learn more about what you can expect in credit repair counseling.
What will you learn in these sessions?
In credit repair counseling, you typically start by learning the basics about debt and lending. You'll learn the basic regulations associated with debt in the United States, how interest works, and the definitions of words used in financial situations. Then, you will move on to learning smart strategies for utilizing debt. You'll learn how to calculate how much debt you can afford to take on, the importance of paying back debt, and so forth. Finally, you'll start to learn about credit scores and what they mean. From there, you will generally learn strategies to help rebuild your credit score. Repairing credit can be a long process post-bankruptcy, but following the tips you learn in credit repair counseling can help you achieve that goal.
Can you take these classes without filing bankruptcy?
Yes. If you make it though the credit counseling and decide you no longer want to file bankruptcy, you can stop the bankruptcy proceedings. This does happen from time to time. Once people learn more about paying off debt and are more confident they have a way to do so, they may no longer think bankruptcy is necessary. It can be wise, however, to get a second opinion from a bankruptcy attorney before pulling the plug on such a big decision.
How long will it take to repair your credit?
Solely attending the counseling sessions does not repair your credit. You'll have to put the principles you learn in these sessions to work over a number of years. Your credit score should continue to improve, a little at a time, as you work to repair your credit. How long it takes, exactly, will depend on how much debt you had, how quickly you're able to access debt again, and whether you make payments on time.
Credit repair counseling can be a next step when you're considering bankruptcy, whether the court requires it or you opt for it yourself.