Before you can file for Chapter 7 or Chapter 13 bankruptcy, you must consult with a nonprofit credit counseling agency. There are two courses you must complete. One is pre-filing and one is post-filing. Most people attend these courses online but they can be completed over the phone as well. The purpose of the first course is to see whether there are any options outside of filing for bankruptcy and the purpose of the second course is to educate you on your budget moving forward.
Qualifying for Bankruptcy
To qualify to file bankruptcy, you must show that you received credit counseling from an agency approved by the U.S Trustee’s office within the 180-day period before you file your bankruptcy. Once you complete the counseling, the agency will give you a certificate of completion that your attorney will file in your case. Before you are able to get your bankruptcy discharge you must complete your post-filing debtor education course in the allotted time before your discharge is entered with the court. If you fail to complete the second course and send the certificate into your attorney your bankruptcy case will be entered without a discharge.
pre-filing credit counseling
The purpose of the pre-filing credit counseling course is to give you an idea of whether you really need to file for bankruptcy or to see if there are other options that may help outside of bankruptcy. The course will walk you through inputting your income and your expenses to see if any repayment plans outside of bankruptcy would be feasible. The course will highlight areas of expenses that they suggest lowering and other advice on saving monthly income. If your debts are too high and your income is too low to repay your debt outside of a bankruptcy, the course will recommend a bankruptcy filing. Even if the counseling course recommends something outside of a bankruptcy you are still free to pursue a bankruptcy, you do not need to follow the advice of the course, only attend the course.
The purpose of the post-filing debtor education course is to make sure you know how to make financially responsible decisions for your budget in the future. The post-filing course is a longer course than the pre-filing course, about 2 hours, and contains more helpful information in terms of your budget. The post-filing course requires a lot of reading and information so that you can make better informed decisions on your budget post-bankruptcy. A lot of my clients will print the information in the second course so that they can reference it later to make sure they are keeping on top of their budget.
Kain & Scott partners with an approved credit counseling agency for our clients to take the courses free of an extra charge. Your attorney will get an email from the credit counseling agency when a client completes the course so that your attorney can file the certificate with the court right away.
If you have more questions on the credit counseling requirements in bankruptcy please reach out to one of our attorneys.