Credit Counseling

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 required individuals to take a government approved credit counseling course 180 days prior to filing bankruptcy. A Debtor Education course must also be completed prior to the discharge of the filer's debts. Credit counseling courses must be approved by the Department of Justice's U.S. Trustee Program (Alabama and North Carolina have a separate process). Bankruptcy filers must have a certificate validating that they have completed the credit counseling course prior to filing for bankruptcy. Credit counseling includes: 1) review of the filer's financial situation 2) evaluation and discussion of bankruptcy alternatives 3) personalized budget. Counseling can be completed online, in person or over the phone. Fees are charged for counseling but may be waived if the filer can not afford to pay them. Counseling fees can vary but generally cost approximately $50. All fees should be outlined prior to the counseling session. Certificates of completions should not cost extra.

Post-filing debtor's education courses are also provided as part of credit counseling and provide information to 1) develop a budget 2) smart credit practices 3) proper money management techniques. Debtor's education can also be done in person, online or over the phone and can range in cost ($50-$100). Debt education fees may also be waived. Certificates are required as proof of completion of post-filing debt education.

Research should be done before hiring a credit counseling agency. Make sure the agency is approved by the Department of Justice's U.S. Trustee Program and ask key questions such as the cost, services offered and confidentiality of personal information.