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As bankruptcy declines Americans still face financial challenges

According to data released by the federal government, more than one million Americans filed for bankruptcy in 2012. While this still suggests that a significant number of Americans are facing tough financial challenges, it is actually a slight decrease in the number of Americans who filed for bankruptcy in 2011, with 1.4 million filings. In fact, since 2010 the number of Americans filing for both Chapter 7 and Chapter 13 bankruptcy has continuously declined.

While the news is certainly good, the fact remains that many Americans continue to face significant financial challenges. Tennessee consumers considering filing for Chapter 7 bankruptcy may be interested to learn a bit more about the process. For example, many consumers who enter a bankruptcy attorney's office for the first time are unaware that consumers must complete credit counseling and debt education before they can file.

The requirement that consumers complete credit counseling actually applies to both Chapter 7 bankruptcy and Chapter 13 bankruptcy. In order for consumers to comply with the federal requirements, the consumer must work with an approved credit counseling agency. The role of the credit counselor is to evaluate the individual filer's financial situation, discuss possible alternatives to filing for bankruptcy and to assist the consumer in developing a financial budget.

If the individual decides to move ahead with Chapter 7 bankruptcy, they are also required under federal law to participate in a post-discharged debtor education program. The reason for the post-discharged education program is to provide consumers with practical tools on how to manage their money, develop a budget and use credit wisely. Both sessions can take place either online or in person and there are multiple providers to choose from.

Source: WTXF, "Know these bankruptcy facts before you file," Andrew Housser, April 15, 2013

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