Since 2005 when the US Bankruptcy Code was amended pursuant to the Bankruptcy Abuse, Prevention and Consumer Protection Act, those individuals filing for bankruptcy protection are required to complete a credit counseling course approved by the US Trustee’s office or court. The course must be completed within 180 days before the consumer files a petition. A credit counseling class must be on the trustee’s list.
This class is the first of two classes that a debtor must take. The second one, called a debtor education course, must be completed after the debtor files and before a discharge will be granted.
The purpose of the pre-bankruptcy counseling class is to give debtors an opportunity to review their financial situation and have it evaluated. The instructor outlines alternatives to bankruptcy, which may include debt negotiation, and a budget plan geared toward their monthly expenses and income. The class last no more than 60 to 90 minutes and may be taken in person, online or even by phone.
Check the link http://www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htm for a list of approved counselors.
Fees for the course are generally $50, though costs vary depending on your location and the services provided in the course. If you are indigent or low income, you can request a fee waiver from the organization that is providing or sponsoring the class before you enroll. The organization does have to advise you of the course fees beforehand.
Debtors should do their due diligence or make inquiries before choosing a credit counselor. Questions that debtors should consider asking include:
- List of services provided
- Is a personal budget prepared for me
- Qualifications of the counselor including training and education
- Fees charged
- Can the fees be waived
Once completed, you will or should receive a certificate of completion that must accompany the petition. There is no extra fee for the certificate.
Although these courses are relatively short, you can learn a great deal in a short period of time as well as become educated about the bankruptcy process and what you can do to avoid future financial difficulties.