People needing to file bankruptcy are required to complete two credit counseling courses as part of the process. This counseling is supposed to provide debtors with information and resources to help them make informed decisions about their financial situation. While there may have been some good intentions for Congress imposing this requirement on debtors in 2005, it was most likely intended by many members of Congress as a way to make the bankruptcy process harder. It has resulted in slightly higher costs for debtors already short of money and no significant impact on the number of people filing. The requirement mistakenly assumes that bad judgment, rather than bad circumstances is the primary cause of bankruptcy filings. Thankfully, the requirement has proven to be a nuisance but not a substantial barrier to people needing to file bankruptcy because of overwhelming debt. Here’s an overview of the credit counseling courses required for bankruptcy debtors:
Before filing bankruptcy, debtors must complete a credit counseling course from an approved agency. This requirement applies to both Chapter 7 and Chapter 13 bankruptcy. The credit counseling course covers topics such as budgeting, debt management, and alternatives to bankruptcy. The goal is to help individuals assess their financial situation and explore potential options for resolving debt. Debtors must obtain a certificate of completion after finishing the credit counseling course. This certificate is a prerequisite for filing bankruptcy and must be submitted with the bankruptcy petition. Only credit counseling agencies approved by the U.S. Trustee Program can issue the necessary certificate. The agency should provide the counseling in person, by phone, or online. If you’re filing bankruptcy with the Nancy L. Thompson Law Office you’ll be given the name of the agency to use so that we receive the certificate directly.
After filing bankruptcy, debtors are required to complete a debtor education course. This is also known as financial management education. The debtor education course must be completed after filing for bankruptcy but before receiving a discharge. In a Chapter 7 case, this typically occurs within 60 days of the meeting of creditors. In a Chapter 13 case, it is usually completed before completing the repayment plan. Similar to pre-bankruptcy counseling, the debtor education course covers financial management topics. It aims to equip debtors with the skills and knowledge necessary to manage their finances responsibly in the future. After completing the debtor education course, debtors must obtain a certificate of completion. This certificate is filed with the bankruptcy court to confirm that the debtor has fulfilled the education requirement. Failure to complete these courses may result in the dismissal of the bankruptcy case without receiving a discharge of debt.
The credit counseling requirements are a hurdle for people needing to file bankruptcy but thankfully they’re not too time consuming or expensive and shouldn’t stop anyone from using bankruptcy as a way to get a fresh start to their financial recovery.
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