What about Credit Counseling?
Under the new law, you will
have to go through an authorized credit counseling course before you file bankruptcy. Not
all credit counselors are approved for bankruptcy counseling and able to issue the bankruptcy certificate required.
All bankruptcy attorneys will have access to the credit counseling agencies who are approved and accredited by the United
States Bankruptcy Court.
You do not need to speak to a credit counselor before
you speak to an attorney, and if you are told you do, you should not continue to talk to that agency. These
courses take about an hour or two, and are even offered online. You might be able to complete it at your attorney's
office or at home.
People will have to complete a Bankruptcy Court Approved Credit Counseling
Course within six months of filing for bankruptcy, before being allowed to file (except in emergency situations).
You must go through an approved program, not just any credit counseling company. Companies are already advertising
hoping to pick up some the fees from potential bankruptcy debtors, but the course must be performed by a Bankruptcy Court
You do have to complete the course and receive a certificate of completion before you can file a bankruptcy
case, but you do not have to do it before you speak to an attorney to see if bankruptcy is right for you.
Your attorney will make sure that you complete any required counseling through an approved course, and you
may be able to even complete the program from your attorney's office or your home, over the Internet. The programs are
being developed now, and should improve as time goes on and we gain experience with the new laws. These are educational
programs that advises you about financial issues and options like bankruptcy, budgeting and debt management
You can start by speaking to a lawyer to find out your legal options.
Your attorney will make sure that you receive the required bankruptcy credit counseling certificate, as well as guide you
through the other requirements under the new law.
This counseling is not required for cases filed before October 17, 2005.
Read my article on BankruptcyLawNetwork.com
on credit counseling debt management programs
Is the Bankruptcy Counseling different from "regular" credit counseling?
There is a difference between the Bankruptcy Credit Counseling required under the new law, and what has
traditionally been offered by most credit counseling agencies, which was really a "debt management plan"
or "DMP" The credit counseling required by the bankruptcy laws are sessions that will look at your situation and give you
some options/suggestions like bankruptcy, debt management, budget changes, etc.. You are not required to participate in a
debt management plan before you file for bankruptcy -- you only have to take the required pre-bankruptcy course.
Before any bankruptcy can be filed, the bankruptcy credit counseling course from a bankruptcy court approved agency
must be taken. The course must be taken before the filing, but no more than 180 days before filing. Almost no one is excused
from this eligibility requirement and if you do file without taking it, your case will probably be dismissed by the Court.
They agency that I recommend to my clients who have Internet access is Hummingbird Credit Counseling (www.Hummingbird.org)
I also support the Institute for Financial Literacy ("IFL") which has Internet and phone counseling, and also provides
home study written materials. Neither Hummingbird nor IFL offer a debt management program, although they may suggest that
someone go into a DMP. By not offering a DMP, there is no conflict of interest by either of these companies representatives
to try to sign you up for a program that may not be in your best interest.
There are many other approved agencies including many CCCS (Consumer Credit Counseling Services). A list of all approved
agencies in your area are usually found on your local bankruptcy court's website.
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