Credit Counseling Requirement Explained

Federal bankruptcy law mandates that all individuals filing for bankruptcy receive credit counseling. The goal is to help individuals who may have poor financial skills or money-management issues to identify the causes of their debts, learn to budget, and plan for a successful financial future after bankruptcy. There are two courses each person filing for bankruptcy must take: the pre-filing credit counseling course and the pre-discharge debtor education course.

The Pre-Filing Credit Counseling Course

The pre-filing credit counseling course must be completed before your bankruptcy petition is filed with the courts. The session can be completed online, over the phone or in person depending on the credit counseling agency you have chosen to work with. This session will take anywhere from 60 to 90 minutes and is meant to help you to assess your debts and determine if you can find an alternative to bankruptcy. You will receive a certificate that must be filed with your bankruptcy petition.

The Pre-Discharge Credit Counseling Course

Pre-discharge credit counseling is a separate course and cannot be completed until after your bankruptcy petition has been filed. The course is longer than the first, usually lasting about 2 hours, and will teach you how to create a budget and properly utilize credit while enhancing your overall money management skills. Failure to complete the pre-discharge credit counseling course may result in your bankruptcy petition being denied.

Finding the Right Bankruptcy Credit Counselor

While dozens of organizations offer credit counseling courses, not all are approved to offer the two specific credit counseling courses you are required to take in order to satisfy federal bankruptcy law. The best way to find an approved course is by visiting the website of the U.S. Trustee Program. There you will find a list of credit counseling agencies, organized by state. The list will include agencies offering courses in person, via phone, or on the web.

Costs Associated with Bankruptcy Credit Counseling

The average cost of the pre-filing credit counseling course is $50. The cost of the pre-discharge credit counseling course is approximately $25 – $100, depending on the service you choose and the region in which you live. Credit counseling agencies are required to provide these courses to individuals who cannot pay but you must file a form with the bankruptcy court to apply for a fee waiver.

Complete each course in a timely manner. The sooner your courses are complete, the sooner you’ll be on the road to financial freedom. I include the fees for the courses in my price to file quotes to prevent confusion