In 2005, Congress passed and the president signed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), a bankruptcy reform law. One of the changes includes a requirement that all debtors complete a credit counseling course from a government approved credit counseling agency PRIOR to filing their Bankruptcy filing. Credit Counseling must be completed 180 days prior to filing a bankruptcy and a certificate of completion must be included with your filing.
This counseling lasts between 60 to 90 minutes and includes an evaluation of your personal financial situation, a discussion of alternatives to bankruptcy, and a personal budget plan. You have the option of taking this course on the phone, in person, or even online. At the end of the session you should have the certificate forwarded to your attorney for filing.
What is an Approved Credit Counseling Agency?
You can find a list of approved credit counseling agencies on the U.S. courts website.www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htm To obtain approval, these agencies must be qualified, experienced counselors who can provide adequate counseling and have no financial interest in the counseling outcome. Prior to picking an agency to take your course, please be sure to double check if they have been approved. There is a fee to take these counseling classes ranging from $30.00-$50.00, but if you are absolutely under no circumstances able to pay this fee; you may apply for a waiver to have the fees removed.
Do Your Research!
Once you have narrowed down a list of approved agencies, do some research and ask around before making your choice. Please see below a list of questions that you should be asking:
- What services do you offer?
- Will you help me develop a plan for avoiding problems in the future?
- What are your fees?
- What if I can’t afford to pay your fees?
- What qualifications do your counselors have? Are they accredited or certified by an outside organization? What training do they receive?
- What do you do to keep information about me (including my address, phone number, and financial information) confidential and secure?
- How are your employees paid? Are they paid more if I sign up for certain services, if I pay a fee, or if I make a contribution to your organization?
Are There Exceptions to the Requirement?
Courts will waive the requirement if there are “exigent circumstances” and the debtor made a request for counseling that an agency was unable to provide within five days. Second, a debtor is excused from the requirement if incapacitated by mental illness or deficiency, if physically impaired such that he or she is unable to participate with reasonable effort or if on active military duty in a combat zone. Third, counseling is not required if the trustee or administrator in a particular court district determines there are not enough approved credit counseling agencies available.
Debtor Education Course
Lastly, you must complete a Debtor Education course (which can be taken from the same company you took the Credit Counseling) AFTER you have filed your Bankruptcy petition. This course will be based on developing a budget, money management and using credit wisely. This course may last longer than the Credit Counseling course but will also come with a certificate as well. Debtor Education courses are also eligible for fee waivers (if approved). Debtors must have this requirement completed prior to getting their cases discharged and closed. At the Lam Law Firm, we make it a practice to have these courses completed prior to attending the 341 meeting.
If you have any questions about your credit counseling requirements prior to filing your Bankruptcy, please call the Lam Law Firm today for a list of approved agencies that we have a working relationship with.
DISCLAIMER: The information contained on this page is for general information, only. It is not intended to be legal advice, nor should you make legal decisions based on this information. Please consult one of our attorneys to see how the law applies to your particular situation.