Many folks in the Sacramento area, from Grass Valley to Citrus Heights, are finding themselves in a downward debt spiral. This can be difficult, if not impossible, to fix without help because debt often leads to more debt which leads to more debt, and so on. That is why so many people are finding the most success dealing with debt by seeking guidance from an experienced bankruptcy attorney.

When it comes to seeking that help, the sooner the better. After a debtor finds a bankruptcy lawyer, but before they actually file the bankruptcy, consumers must do a credit counseling session with an approved nonprofit credit-counseling agency (a good attorney will help a debtor find a good one.) The purpose of this counseling is to help educate folks so that they understand how large amounts of debt often pile up and to make sure the bankruptcy leads to a true fresh start.

To be prepared for the session, which is usually done in one sitting within an hour or two, it is important to go into it thinking about the overall financial picture of the consumer. They should think about all the people to whom money is owed, all the bills that come in the mail each month, and all of the expenses that the family needs to survive in a typical month. The same thought process goes for income. That is usually a more simple analysis, but it’s still important.

This is also a good time for the consumer to think about goals, both short-term and long-term. Does the debtor own a home and want to keep it? Or does the debtor want to be able to shed credit card debt to be able to buy a home? It’s important to be reasonable and flexible while making these decisions, because it will help ensure that the bankruptcy plan devised by the consumer and her attorney will work to the benefit of her and her family.

This requirement of credit counseling has only been around for about 10 years since the 2005 amendments to the Bankruptcy Code were enacted. The rules states that a debtor shall not be eligible for relief if the debtor has not received, within 180 days before the filing of the petition, a briefing from an approved nonprofit budget and credit-counseling agency. Many of these agencies provide counseling over the telephone or over the internet. The cost is often between $35 and $50, but a good bankruptcy law office will often be able to guide the debtor to the best deal to help save money.

While it is important to go into the credit-counseling session with an open mind and financial goals in mind, it is certainly nothing to be afraid of. It can be very informative and even enlightening for folks who are eager to improve their financial outlook and start accumulating wealth post-bankruptcy. Once the course is completed, the attorney and the debtor can file the bankruptcy and process of achieving a fresh start can officially begin.