Mandatory Credit Counseling and Debtor Education Courses for Bankruptcy Filers

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 stipulates that when a person files for personal bankruptcy, they must go through two counseling sessions: a credit counseling course and a debtor education course. Within 180 days before a person files for bankruptcy, they must receive credit counseling from an organization approved by the Department of Justice’s U.S. Trustee Program. Then, once they have filed bankruptcy, they must complete a debtor education course in order to have their debts discharged. The U.S. Trustee Program operates in all states except Alabama and North Carolina.

Pre-Filing Credit Counseling

You must go through a credit counseling session with an approved credit counseling organization before you file for bankruptcy. In this course you will receive an evaluation of your personal financial situation, a discussion of alternatives to bankruptcy, and a personal budget plan. Approximately half the people that complete the credit counseling session immediately hire a lawyer and file a case, while the other half usually try cutting more expenses to suspend filing.

The credit counseling course should last about 60 to 90 minutes, and can take place in person, on the phone, or even online. Generally, this session costs about $50 but can be waived for consumers who cannot afford to pay the fee. To waive the fee, you need to request a fee waiver from the counseling organization before the course begins.

Once the course is completed, you must receive a certificate as proof of your participation. It is important to check the U.S. Trustee’s website to make sure that you get the certificate from a counseling organization that is approved in the judicial district where you are filing bankruptcy. To protect against fraud, the certificates are produced through a central automated system and are numbered.

When searching for a credit counseling provider, make sure you receive services only from approved providers for your judicial district. Check the list at www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htm or at the bankruptcy clerk’s office for the district where you will file.

Post-Filing Debtor Education

As mentioned above, you must complete a debtor education course after you file for bankruptcy in order for your debts to be discharged. As a rule, there is no way that you can take the debtor education course at the same time as the credit counseling course. In the debtor education course, you will receive information on developing a budget, managing money, using credit wisely, and other resources. This course may last about two hours, and like credit counseling can be provided in person, on the phone, or online.

The fee for the debtor education session is generally between $50 to $100. As with credit counseling, if you are unable to pay the session fee, you should seek a fee waiver from the debtor education provider.

Once the course is completed, you should obtain a certificate as proof of completion, separate from the certificate you received after completing your pre-filing credit counseling.

Check the list of approved debtor education providers at www.usdoj.gov/ust/eo/bapcpa/ccde/de_approved.htm or at the bankruptcy clerk’s office in your district.