Filing for Bankruptcy Mandatory Counseling Requirements

In October, 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act became law. With only a few exceptions, consumers filing for bankruptcy protection must receive a bankruptcy counseling certificate from an approved provider of the United States Trustee Program, an affiliate of the Department of Justice. The first of two mandated bankruptcy classes must be finished within a six month period before filing for protection. Each consumer who files for bankruptcy must complete the U.S. Trustee approved debtor education course. This counseling is also called ‘pre-discharge education.' Only organizations and businesses authorized by the U.S. Trustee Program have permission to advertise and offer counseling and educational sessions.

Bankruptcy Counseling Certificate

As part of the bankruptcy proceedings consumers receive a bankruptcy counseling certificate when they complete the two counseling sessions. Each certificate is numbered and produced through a centralized, automated system. This system of controls reduces the possibility of fraudulently obtaining a certificate.

Pre-bankruptcy counseling sessions include an evaluation of the debtor's finances, a discussion of alternatives to filing for bankruptcy, and development of a personal budget plan. Post bankruptcy instruction teaches money and credit management practices to assist the debtor in avoiding future financial difficulties.

If the debtor cannot afford a credit counseling agency's fees, he or she can request a waiver of fees from the organization. The organization is required to provide free services when requested through the organization's waiver process.

Not All Services Are the Same

Not all authorized organizations offer the same services or benefits to the consumer. Services offered and fees involved are important pieces of information to consider when choosing a counseling agency. Ask if it is necessary to request a waiver of fees before bankruptcy classes begin. Learn how the agency will safeguard your confidential, personal information. What kinds of training and education do the counselors receive that qualifies them to help you in this situation?

In Alabama and North Carolina court officials called Bankruptcy Administrators approve pre-bankruptcy counseling and pre-discharge debtor education providers.

Bankruptcy will affect your ability to get credit for some period. It is a serious legal matter. However, tens of thousands of people have rebuilt sterling credit ratings over time after filing for bankruptcy.