Credit Counseling

If you have been to see an attorney regarding a possible bankruptcy filing, you have likely been told to consult a counseling agency and arrange to take two separate online courses. The purpose of these classes is to help you find a solution to handling your debt outside of bankruptcy if possible. Your filing will not go forward without completing counseling, so it is an important, if little known, step in the process.

Requirements for Credit Counseling

To qualify for a Chapter 7 or Chapter 13 bankruptcy, you must receive counseling from an agency approved by the U.S. Trustee’s Office before and after you file for bankruptcy. You can find an agency or a course through your attorney, who will be able to provide you with a variety of options, or via the Trustee’s website.

The first counseling course must be completed within a 180-day period before you file bankruptcy. Your attorney will require proof that you took the course, along with any plans that the agency proposes. The second course must be complete within 60 days of filing a Chapter 7, or within 5 years of filing a Chapter 13.

Cost of Counseling

Credit counseling services will range from $10.00 to $50.00 per course. Your attorney can help you find the most affordable option in your area. They can be taken either on line or occasionally via telephone for individuals without reliable internet connection. If for any reason you cannot afford the fee, the counseling agency is required to provide a reduced rate based on your income level. However, most courses will be relatively low cost, and shouldn’t cause significant financial hardship.

There are exemptions to the counseling requirement, which require you to prove that:

1. You had to file for bankruptcy immediately, without taking the course due to something like a foreclosure.
2. You were unable to obtain counseling within five days after requesting it from a particular agency.
3. You have a physical disability that prevents you from completing the course.
4. You have a mental incapacity which prevents you from completing the course.
5. You are on active military duty.

If any of these apply, you may be able to waive the credit counseling requirement. But remember, it is an important and useful step, designed to help you manage your payments and find the debt repayment option which is best for you.

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