Do I Have to Attend Credit Counseling in Order to File for Bankruptcy?

Filing for bankruptcy may provide an individual with the financial relief they need when dealing with large amounts of debt. However, filing for bankruptcy has a number of consequences, can result in the loss of personal property, significantly hurts one’s credit score and impairs the ability to get a loan in the future, and is overall a legally intensive and complex process that is often best pursued with the help of a bankruptcy lawyer. One part of the process that is important to understand is the requirement to attend credit counseling prior to filing for bankruptcy.

Federal Requirement to Attend Bankruptcy Credit Counseling

Per the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act, credit counseling is required for all persons who wish to file for bankruptcy. This counseling must be completed within six months before a person files for bankruptcy relief. In addition to pre-bankruptcy credit filing, a financial management instruction course is also required after filing for bankruptcy.

What Do You Learn in the Credit Counseling Course?

As explained in Consumer Information published by the Federal Trade Commission (cited above), pre-bankruptcy counseling must be performed by an approved credit counseling organization. The counseling will:

• Evaluate your personal financial situation;
• Discuss with you possible alternatives to bankruptcy (initiating the credit counseling does not mean you have to file for bankruptcy); and
• Help you to put together a personal budget plan.

The post-filing debtor education class (which is also required) must also be with an approved provider. Like the pre-filing class, this class will focus on providing you with tools and strategies for developing a budget, using credit in a smart and safe way, and overall managing money.

How Much Do Credit Counseling Courses Cost?

The good news about credit counseling, both pre- and post-filing for bankruptcy, is that it is designed to be affordable for those who are struggling financially. Your pre-bankruptcy filing class will be about 60 to 90 minutes long, and costs $50. However, if you cannot afford this fee, the fee will be waived; credit counseling must be provided for free for those who cannot afford it otherwise. Your post-filing bankruptcy course is a little longer and more comprehensive (about two hours), and will probably cost no more than $100 (and may be less). Just like with pre-filing courses, if you cannot afford the fee, you can fill out an application to have the fee waived.

Working with an Attorney

If you do decide to file for bankruptcy, working with a knowledgeable bankruptcy attorney can be very helpful. Not only will your attorney help you to understand your options, but can also guide you through the process of filing.

At Whitten & Whitten, our experienced bankruptcy attorneys are ready to assist you. Please contact us today to schedule your free consultation and get the process started to improve your financial future.