Debt Counseling Requirements
Mandated Debt Relief Education for Bankruptcy
In 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act. Part of the impetus behind the law was to discourage Chapter 7 filings and encourage more people to file for Chapter 13 reorganization of debts.
One key change in the new bankruptcy law is a provision requiring citizens to get professional debt counseling to avoid similar financial troubles in the future. This requirement is not a big burden, and should not deter you from filing for bankruptcy.
Step One: Pre-Filing Counseling
Before you can actually file for bankruptcy, you must consult with an approved debt-counseling agency to discuss debt relief alternatives (e.g., negotiating debts with creditors, obtaining a second mortgage or consolidating/refinancing debts). This step involves a minor time commitment — it can often be done by phone or over the Internet. No matter what advice you receive from the credit counselor, you still have the legal right to file for bankruptcy.
Step Two: Debtor Education
Shortly after you file for bankruptcy you must take a debtor education course. The purpose of this debt counseling education is to learn how to create and stick to a realistic budget so that you do not repeat the pattern that led to your current financial straits.
Your bankruptcy will not be discharged until you complete the course. If you retain me as your bankruptcy lawyer, we can help steer you to an approved credit-counseling agency, including non-profit agencies. The course can be completed on your own schedule, and often can be done by phone or over the Internet.
We have listed below the names of two credit reporting companies who can help you with your credit counseling requirements.
MONEY MANAGEMENT Online or by Phone 1-877-918-2227
HUMMINGBIRD CREDIT COUNSELING EDUCATION Online only 1-800-645-4959