Before filing for bankruptcy, you are required to go through credit counseling. These classes are designed to teach you how to manage your debts better as well as work to get your debts repaid instead of going through bankruptcy. By offering these classes, the state is trying to reduce the number of people who have to go through the bankruptcy process to get relief from their debts.
Debt Management Plan
One of the things you will do is speak with your creditors to try and create payment plans to repay your debts. In many cases, debt collectors are willing to forego some of the fees and interest rates in order to collect a large portion of the debts. Once a repayment plan has been created, as long as you keep up with the payments, you will be able to pay off the debts without having to pay the full amount. By doing this, you can lower the amounts you need to repay and work to get everything paid off as quickly as possible.
Budgeting
The other thing you will learn is how to budget more effectively. In many cases, people are living above their means and piling on debts to cover the things they purchase. Instead, budgeting teaches them how to live without relying on credit cards or other debts to make purchases. This can prevent them from obtaining the amount of debt they are trying to repay again. In other cases, people have lost part or all of their income and are in need of help creating a lower budget to get out of debt. This way, they can learn to live on less, since they are making less, and repay their debts.
