Bankruptcy Counseling Requirements

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Bankruptcy counseling and course requirements are used for many reasons. Counseling is generally used to determine whether or not bankruptcy is the only solution.

Before filing a petition for bankruptcy under Chapter 7 or Chapter 13 of the bankruptcy code, the debtor must undergo pre-bankruptcy counseling as well as debtor's education. The counseling must be approved by the U.S. Trustee Program. These counseling courses vary and it is important for the debtor to do some research in order to ensure that he or she is getting the right counseling advice. Using search engines like Google, and the American Bar Association (ABA) website, might help you locate information and/or course locations. It's essential that you select the one that best fits you, but also one which is approved by the courts.

As a rule, the pre-bankruptcy course cannot be taken in conjunction with the debtors education course, it must be taken prior to filing, while debtors education is taken after. In this course, the debtor can investigate the reasons why they are in the financial state they are in, what caused it, and its severity.

Pre-bankruptcy counseling will usually include an overall evaluation of the debtor's financial situation and personal budget. Also, pre-bankruptcy counseling is done in order to discuss the debtor's alternatives to filing bankruptcy. This type of counseling does not take a long time and can be done in person, over the telephone, or even online. Pre-bankruptcy counseling can cost the debtor a set fee. However, in some circumstances, the debtor can avoid the fee if he or she is unable to pay it. It is important for the debtor to ask about any fees prior to engaging in the counseling session.

After completing the pre-bankruptcy counseling, the debtor will receive a certificate that serves as proof of completion of the course. This certificate should be submitted to the court.

Along with pre-bankruptcy counseling, a debtor must also take a debtor's education course. However, this course is taken after filing bankruptcy. Like the pre-bankruptcy counseling, this course must be approved by the U.S. Trustee Program and can be taken over the phone, in person, or online. There is a fee for this course and it is typically between $50 and $100. However, if the debtor is unable to pay the fee, he or she may be excused from it. This course is typically more in-depth than the pre-bankruptcy counseling. Although it usually takes longer to complete, it is still a relatively short course.

During this course, money management, budget preparation, credit advice, and other important financial issues are discussed. Like the pre-bankruptcy counseling, after the completion of this course, the debtor shall receive a certificate acknowledging the course's completion. This certificate is completely different from the pre-bankruptcy counseling and a debtor should make sure of this upon receiving the certificate.

Choosing the proper credit counselor is as important and the courses themselves. If the credit counseling that you are seeking is for the purpose of complying with your states bankruptcy laws, make sure that you seek services only from providers approved by the judicial district within your state. Some key questions to ask once you have decided on a few providers are:
what kind of services are offered?
what are the fees associated with the counseling?
are there any specifications for people who cannot afford the fees?
how is my personal information kept secure?
what kind of plans would be made to help avoid future financial turmoil?

The U.S. Trustee Program oversees bankruptcy cases in 48 states. The exceptions include only North Carolina and Alabama.


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