How Bankruptcy Credit Counseling Works

Comprehensive bankruptcy credit counseling is a legal requirement since the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was enacted. Since the passing of the new bankruptcy law, you will need to receive counseling from a government-approved organization 180 days prior to filing. You will also need to pass a debtor education course in order to better prepare you for financial life once discharged, but this normally takes place at a later date.

How to Choose a Credit Counselor

- The qualifications of the counselor.

- An outline of the advice that will be provided.

- Check that the fee structure complies with legislative requirements.

- The help offered in the event that you can't afford to pay the fee.

- Will help be tendered in the event of future financial difficulties?

Approved Bankruptcy Credit Counseling Providers

In order to be able to provide you with a full, comprehensive counseling service, approval must first be granted by the Department of Justice’s U.S. Trustee Program. Check the U.S. Trustee Program’s list to make sure that the advice you are receiving qualifies you. The exceptions to this rule are Alabama and North Carolina. In these states, a court-appointed bankruptcy administrator is responsible instead.

A counseling session will normally last for between 60 and 90 minutes. It can be provided via phone or Internet if you aren't able to attend in person. The cost is normally $50, although it is normally possible to get a fee waiver from the counseling organization prior to the commencement of the session.

Bankruptcy Credit Counseling Certificate

Under the Bankruptcy Reform Act, it is necessary to provide a certificate of credit counseling completion before you file for bankruptcy. Unless the course was approved by the U.S. Trustee Program or complies with Alabama and North Carolina state rules, it will not be accepted. All certificates are numbered to help to ward off fraud so there is no way round this requirement.

Counseling shouldn't be seen as an inconvenience as it is a way to help you make better financial decisions in the future. Try not to leave counseling until the last minute, particularly if you are trying to stop home foreclosure when power of sale is permitted under state law.

Disclaimer: This article in no way attempts to provide legal, financial or tax advice. One should consult a licensed attorney, tax advisor, or other qualified financial professional before proceeding.

Disclaimer: This article in no way attempts to provide legal, financial or tax advice. One should consult a licensed attorney, tax advisor, or other qualified financial professional before proceeding.