Pre- Bankruptcy Counseling

Category: Finance.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 launched a new era: With limited exceptions, people who plan to file for bankruptcy protection must get credit counseling from a government- approved organization within 180 days before they file.

The Department of Justice s U. They also must complete a debtor education course to have their debts discharged. Only the counselors and educators that appear on the U. Trustee Program approves organizations to provide the mandatory credit counseling and debtor education. By law, the U. Trustee Program s lists can advertise that they are, approved to provide, indeed the required counseling and debtor education. In these states, court officials called Bankruptcy Administrators approve pre- bankruptcy credit counseling organizations and pre- discharge debtor education course providers.

Trustee Program does not operate in Alabama and North Carolina. Counseling and Education Requirements. Credit counseling must take place before you file for bankruptcy. As a rule, pre- bankruptcy credit counseling and pre- discharge debtor education may not be provided at the same time. Debtor education must take place after you file. Only credit counseling organizations and debtor education course providers that have been approved by the U. In general, you must file a certificate of credit counseling completion when you file for bankruptcy and evidence of completion of debtor education after you file for bankruptcy- but before your debts are discharged.

To protect against fraud, the certificates are produced through a central automated system and are numbered. Trustee Program may issue these certificates. Pre- bankruptcy Counseling. A typical counseling session should last about 60 to 90 minutes, and can take place in person, or online, on the phone. A pre- bankruptcy counseling session with an approved credit counseling organization should include an evaluation of your personal financial situation, a discussion of alternatives to bankruptcy, and a personal budget plan. The counseling organization is required to provide the counseling free of charge for those consumers who cannot afford to pay.

Otherwise, you may be charged a fee for the counseling, which will generally be about$ 50, depending on where you live, the types of services you receive, and other factors. If you cannot afford to pay a fee for credit counseling, you should request a fee waiver from the counseling organization before the session begins. The counseling organization is required to discuss any fees with you before starting the counseling session. Check the U. Once you have completed the required counseling, you must get a certificate as proof. Credit counseling organizations may not charge an extra fee for the certificate.

Trustee s website to be sure that you receive the certificate from a counseling organization that is approved in the judicial district where you are filing bankruptcy.

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