What to Exepect in Chapter 7 Bankruptcy Credit Couseling

In 2005 congress passed Bankruptcy Abuse Prevention Consumer Protection Act.” This change to the bankruptcy code requires consumer debtors to attend a credit-counseling course before they can file a petition for bankruptcy.  This change was pushed through by credit card companies because of the alarming rate of bankruptcy filings at that time.  The purpose was to prevent abuse and force more debtors to file chapter 13 petitions than chapter 7 liquidations.

What to Expect

There are many ways to accomplish this credit counseling.  The bankruptcy clerk’s office in your jurisdiction maintains a list of approved credit counseling agencies.  Credit counseling is:

• Available online,  by phone and of course in person. 
• It takes a hour and a half to two hours
• Cost varies between $30 and $75 dollars
• A credit counseling certificate is issued at the end of the session
• Both husband and wife will need a certificate
• During the session you are required to make a budget and examine your bills to find out if you do not need to file bankruptcy
• The credit certificate is good for 180 days after it is issued
• Courses are conducted in English and many other languages
• If you file bankruptcy and have not taken this course, the petition will be dismissed within 72 hours of filing.

Counseling is required even if it is obvious that you need to file bankruptcy.  You are only required to attend a counseling session, you do not have to agree with it.  It the counseling agency should come up with a repayment plan you will have to submit the plan along with your counseling certificate.

Post Bankruptcy Counseling

A second counseling session is required near the end of your case before your case is discharged.   This second session is to learn personal financial management.  You will not receive your discharge until you submit proof that you have attended this session.  These requirements were supposed the slow the number of bankruptcy filings but it does not appear that these changes to the bankruptcy law have been successful.

Talk to a Lawyer

You should seek competent legal counsel if you are filing bankruptcy.  A good lawyer will protect your interests and help you reach your financial goals as well as knowing the ins and outs of protecting assets in a chapter 7 or other bankruptcy filing.