The first aspect of bankruptcy and credit each person should be aware of is the time a bankruptcy remains recorded in public courts. 20 years.
Credit reporting agencies will reflect this information on your credit report for 10 years. The intended purpose of credit counseling is to help the bankruptcy petitioner develop fundamental financial management skills, in the hope of avoiding further monetary difficulties in the future.
The U.S. Justice Department oversees a program governed through the U.S. Trustees Office, which grants approval to agencies to provide the compulsory credit counseling courses for prospective bankruptcy petitioners. The word prospective is accentuated here because until you successfully complete this credit counseling, your bankruptcy petition will not be discharged. This is required regardless of the type of bankruptcy chapter you intend on filing.
You must seek credit counseling from an agency on the approved list of vendors. Be aware that it is your sole responsibility to pay for the training. Failure to comply will result in a dismissal of your bankruptcy petition.
Credit Counseling Briefing:
Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, (BAPCPA) people seeking the protection of the U.S. bankruptcy courts must comply with certain rules as they relate specifically to the Internal Revenue Service (IRS).
All bankruptcy petitioners must:
The Bankruptcy Trustee will request the IRS's Centralized Insolvency Operation to certify your tax returns, and any outstanding balance. The IRS will notify the Trustee within 60 days if the tax returns are accepted, or will be challenged.
The bankruptcy petitioner will be told within 180 days from the date of the initial request, of any delinquent taxes that are due.
The amount of your tax liability varies with the type of bankruptcy filed. The court and the IRS will determine your repayment plan for the IRS.
The IRS at their discretion may seek an order converting a Chapter 7 bankruptcy to a Chapter 13 bankruptcy. Should the IRS suspect fraudulent activities associated with the filing of tax returns, or for any other reason, which they deem the petitioner out of compliance with the rules, the IRS, may request a total dismal of the bankruptcy petition.