If you are like most in Dayton who struggle with debt, the prospect of having to seek bankruptcy protection may not be attractive, yet also may appear to be your only option if you hope to get a handle on your financial situation again. Your concerns might come from an assumption that the government is more than willing to offer you bankruptcy protection as a way out, when in reality, the bankruptcy code is designed to offer you several options to deal with your debt.
Why else, then, would it be a requirement that you go through credit counseling prior to filing for bankruptcy? Per Section 521(b) of the Federal Bankruptcy Code, you must submit a certificate showing that you have completed credit counseling along with the other required paperwork when first filing for bankruptcy. A credit counseling agency can develop a repayment plan that shows how you might be able to repay your creditors without filing for bankruptcy. In some cases (depending on the assets you have available to you), this may only serve to reaffirm the need for you to file for bankruptcy. However, it may also reveal that repayment is indeed a reasonable option.
You are not legally obligated to follow the repayment plan that a credit counseling agency develops for you; if you have one, however, you must include it in your bankruptcy paperwork. The court will review to see if it is necessary that you file for bankruptcy. Even if it is believed that you can repay your debts, bankruptcy protection may still be available to you. The court may simply ask that you file for a Chapter 13 bankruptcy (which stops collection activity while you repay your debts) as opposed to a Chapter 7.
