If you decide to declare Chapter 7 or 13 bankruptcy, it's a major decision that you are making for your financial welfare. It's possible that this is the best way to move forward to tackle your debt and get into a better financial spot, particularly if you don't think that you could pay off your debts within the next few years.
Bankruptcy is a long process, and it can be confusing. Before you go through with it, you'll have to go through credit counseling. The law requires that you attend two sessions including one pre-filing counseling session that kicks off the process and one pre-discharge session before the debts are allowed to be forgiven.
The sessions are intended to help you understand how bankruptcy works and the effect it might have on your finances. Counseling also describes how it could affect your credit rating. The sessions don't take long to finish.
Your attorney will help you arrange the right type of counseling to get the process moving. Your attorney won't turn in any of your bankruptcy information or applications to the court before your pre-filing counseling is completed, since your case would simply be thrown out, wasting time and money. The counseling course takes the time to go through the advantages and disadvantages of the bankruptcy and provide alternatives, which is why it's needed before you can file. You may find that one of the alternatives is a better option than bankruptcy, or you may affirm your choice to seek bankruptcy.
Once you complete the session, you are able to apply for the bankruptcy. You'll go through all the steps for bankruptcy before you have to go through a pre-discharge counseling session. This is the last step before the court finalizes the bankruptcy, and it offers information that can help you manage your finances in the future.
Source: Nerd Wallet, "Bankruptcy Counseling: What It Is, What to Expect," Sean Pyles, accessed Nov. 10, 2016