Laws demand that credit counseling precede a bankruptcy filing and before your debts can be discharged, another credit counseling session is mandated. The pre-filing session with a certified counselor forces you to consider all options to avoid the difficult process of going to court to have your debts discharged or reduced through bankruptcy. At the very least, a credit counseling session helps you understand your options and the consequences of filing for protection from creditors.
Anyone who has racked up big bills and has spent months dealing with calls, letters and other irritating encounters with debt collectors knows how tempting filing for bankruptcy is. Under the two major personal bankruptcy statutes — Chapter 7 and Chapter 13 — debts are either wiped away completely or reduced to a manageable repayment plan.
But a lot of people don’t dwell on the impact a filing will have on finances for years to come. Your filing will be noted on your credit report for 7-10 years, depending on which form of bankruptcy you choose. It also becomes a matter of public record that anyone can access by petitioning the courts.