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What is a bankruptcy certificate and how does it work?

On Behalf of | May 3, 2022 | Bankruptcy |

New Jersey residents who have trouble paying off their debt might need a helping hand. Bankruptcy is often a good option for alleviating the burden. Before filing, you often receive a bankruptcy certificate. It’s important to know what it is and how it works.

What is a bankruptcy certificate?

A bankruptcy certificate is something you receive when you have completed credit counseling as part of your bankruptcy filing requirements. People who struggle with debt are required to seek help to learn how to make better choices with their spending when using credit cards, which is why credit counseling services are available.

After you are finished with credit counseling and receive a bankruptcy certificate, you can file for bankruptcy. However, the requirements don’t end there as you have to take a debtor education course as well. You will then receive a different bankruptcy certificate.

How does a bankruptcy certificate work?

A bankruptcy certificate is issued by credit counseling services and debtor education programs that are approved by the United States Trustee Program.

Credit counseling services allow you to meet with a credit counselor who will thoroughly go over your financial documents to determine whether bankruptcy is the right option for your situation. The counselor analyzes various factors, including what caused you to go into debt. The ultimate goal of credit counseling is to have a plan created that can help you better manage your finances going forward. Once you finish your credit counseling, you receive a bankruptcy certificate that’s good for 180 days. The certificate is included in your petition for bankruptcy.

Next, you will have to take the debtor education course, which teaches various aspects about managing your finances. Another bankruptcy certificate is issued once you complete the course. You must file it with the court to discharge your debts.