What are the Credit Counseling Courses?
Before you can be eligible to file for chapter 7 or chapter 13 bankruptcy, you must complete two separate counseling courses. To prove that you properly completed the course you must receive a certificate of completion.
In 2005 Congress changed the bankruptcy laws to make credit counseling and debtor education courses mandatory to receive a bankruptcy discharge. §109(h) provides that a debtor will no longer be eligible to file under either chapter 7 or chapter 13 unless within 180 days prior to filing the debtor received an “individual or group briefing” from a nonprofit budget and credit counseling agency approved by the United States trustee or bankruptcy administrator.
The Purpose of the Pre-filing Credit Counseling Course
The intended purpose of the credit counseling course is to help you determine whether bankruptcy is right for your situation. The counseling agency helps you prepare a budget based on your income and expenses and then will review with you your options for repaying the debt. In most cases, the agency confirms that bankruptcy is your best option but not always. However, even if the agency doesn’t suggest bankruptcy you’re not required to adhere to their decision. The law only requires that you complete the counseling not follow their suggestion.
Credit Counseling Costs
There are many agencies that are approved by the United States trustee or bankruptcy administrator and the cost can vary greatly, from approximately $15.00 to $50.00. Two (2) courses are required the second course is usually slightly cheaper than the first one.
Debtor Education Course
This is the second course and is required to be completed after filing your case but within 45 days of your 341(a) meeting with the trustee. If you don’t complete this second course, the trustee will not approve your discharge. The purpose of this course is to educate the debtor to make more sound financial decisions in the future to prevent you from becoming insolvent yet again. Once this course is completed you must file it with the bankruptcy court.
Ways to Complete the Courses
There are a couple different ways to complete these courses. The first and easiest way is to complete it online, the next is to complete it over the phone, and the final way is in person in a group setting. The in-person courses are usually much more expensive due to covering the cost for the instructor. After each course you will receive a certificate of completion. You should forward this certificate to your attorney for filing with the court.
Although, the courses are two more hoops to jump through to obtain your bankruptcy discharge, it is necessary, and usually doesn’t take longer than 90 mins to complete. All in all, it is painless and you can learn some helpful tips for life after bankruptcy. If you have any further questions, please contact our office.