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Pre-Filing Credit Counseling Requirement

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There are a number of steps to take before filing for bankruptcy. One of these required steps is completing a pre-filing credit counseling briefing. The main purpose of the credit counseling requirement is to help the individual understand what filing for bankruptcy means and the implications of filing for bankruptcy. If you are thinking of filing for bankruptcy, an experienced Merrillville bankruptcy attorney at Whitten & Whitten can help answer your questions about the different things to think about before filing for bankruptcy.

Counseling Requirement

The credit counseling requirement applies to all individuals regardless of whether they are filing for Chapter 7 or 13 bankruptcy. Under section 109(h) of the Bankruptcy Code, all individual debtors must complete an individual or group briefing within 180 days before filing for bankruptcy. The timing for completing the counseling is important. When an individual completes the credit counseling, he or she will receive a certificate that is only valid for 180 days. If the individual delays filing for bankruptcy past the 180 days that the certificate is good for, then he or she will have to retake the credit counseling. The credit counseling requirement should not be confused with the requirement that debtors complete a post-filing debtor education course about how to manage finances.

The required credit counseling must be from a nonprofit budget and counseling agency that is approved by the United States Trustee. Lists of approved credit counseling agencies can be found here. There are options for completing the requirement. Most individuals complete the credit counseling on the internet, but it is also possible to complete it over the phone. Some agencies also offer the credit counseling in Spanish.

Content of the Counseling

The pre-filing credit counseling course generally lasts between one and one and a half hours. The credit counseling includes an analysis of the individual’s current financial condition, the factors that caused the individual’s current financial condition, a discussion about possible alternatives to filing for bankruptcy, and an analysis of how the individual can develop a plan to deal with his or her financial difficulties.

Exceptions to the Counseling Requirement

In very limited circumstances, it may be possible for a potential debtor to obtain an exemption from the credit counseling requirement. There are exceptions for debtors who are unable to complete the requirement because of incapacity, disability, or active military duty in a combat zone. The court will determine whether or not the debtor qualifies for an exemption. Additionally, in limited circumstances, an individual may file for bankruptcy and then have 30 days to complete the credit counseling requirement. To qualify for this extension, the debtor must submit to the court a certification that:

  1. Describes pressing circumstances that merit a waiver of the requirements (e.g., to prevent foreclosure or wage garnishment); and
  2. States that the debtor requested the required counseling, but was unable to complete it.

Learn More from a Merrillville Bankruptcy Attorney

If you are considering filing for bankruptcy and have questions about the process, Whitten & Whitten have experienced Merrillville bankruptcy attorneys who can help guide you through the filing process. For a free consultation, visit us online or contact us by phone at 219-756-0555.

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