The Dangers of Not Having Credit Counseling Before you File for Bankruptcy
In order to apply for bankruptcy protection, either under Chapter 7 or Chapter 13, you must attend a mandatory credit counseling session. You must attend this credit counseling session within the six months preceding your bankruptcy filing.
You must receive this credit counseling from an organization approved by the Department of Justices U.S. Trustee Program, except in Alabama and North Carolina where court officials (called Bankruptcy Administrators) approve pre-bankruptcy credit counseling services. The pre-bankruptcy credit counseling session with the approved credit counseling organization will include an evaluation of your personal financial situation, a discussion of the alternatives to bankruptcy; and tools to help you make a personal budget plan.
A typical credit counseling session will last for about one hour. While these sessions are typically provided in a face to face meeting between the debtor and the credit counselor, they can also be conducted by phone or online.
The credit counseling organization will typically charge a fee of approximately $50 for the session, although these fees will vary based on where you live, the types of services you receive, you ability to pay, and how the counseling was delivered. The counseling organization must disclose all fees to you prior to starting the counseling session. If you cannot afford to pay the fee for credit counseling, you must request a fee waiver from the counseling organization before the counseling session starts. Credit counseling services are required to provide the counseling free of charge to debtors who cannot afford to pay the standard counseling fee.
Once your counseling session is completed, you will receive a certificate as proof of the completion of your counseling. Your credit counselor may not charge extra for this certificate, and they must provide you with the certificate within 24 hours of the completion of your counseling.
You must file a certificate of credit counseling completion when you file for bankruptcy protection. Only credit counseling organizations that have been approved by the U.S. Trustee Program may issue these certificates. As a fraud prevention measure, these certificates are sequentially numbered, and produced through a central automated processing system.
The point to remember is this: you must have your credit counseling session completed before you file for bankruptcy. If you do not have a certificate proving that you have completed your credit counseling, your bankruptcy case will be dismissed, and you will not receive relief from your debts.
Bernard Johnson has many years experience advising people on the advantages and disadvantages of credit counseling, and is a contributor to http://www.credit-counselling.org. He has written many articles on mandatory credit counseling before bankruptcy, and post bankruptcy filing credit counseling
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