Bankruptcy Articles

Before filing personal bankruptcy (Chapter 13 or Chapter 7) you need to be aware of the following procedures to make certain your bankruptcy petition will be heard by the courts.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 requires all debtors to to be given credit counseling before they will be permitted to file bankruptcy. This credit counseling was made mandatory to ensure that people understood their options before going bankrupt and answer questions you may have about the bankruptcy process.

Non-profit credit counseling services need to be be approved by the United States Department of Justice’s Trustee Program, except in Alabama and North Carolina where court officials (specifically Bankruptcy Administrators) approve pre-bankruptcy credit counseling services.

The pre-bankruptcy session will include an assessment of your current personal financial situation, a discussion of alternatives to bankruptcy, and an individual budget plan. A certified credit counselor will help you look at all your choices. He or she is required by law to offer you impartial advice. This means that he or she cannot lead you to make a specific financial decision.

A typical session should last between 60 to 90 minutes, and can take place in person, over the phone, or online. Online services may include an interactive online course that you can work on and complete at your own pace.

The counseling organization is required to provide the counseling at no cost for people who cannot afford to pay. If you cannot afford to pay the fee for credit counseling, you should ask for a fee waiver from the counseling organization before the session begins. Otherwise, you may be charged a fee for the counseling, which is typically between $40 and $50, depending on where you live, the types of services you receive, and other factors. The counseling organization is required to discuss any fees with you before beginning the counseling session.

Once you have finished the required counseling, you must get a certificate as proof. Check the U.S. Trustee’s website to be sure that you obtain the certificate from a counseling organization that is approved in the judicial district where you are filing bankruptcy. Credit counseling organizations may not charge an extra fee for the certificate.

Your pre-bankruptcy credit counseling session must be taken within the 180 days prior to your bankruptcy filing. You must take the counseling completion certificate with you to court. If you go to bankruptcy court to file bankruptcy and you have not completed your credit counseling, you will not be allowed to file for bankruptcy. Your bankruptcy request will be dismissed.

Filed under: Bankruptcy