If you’re considering Chapter 7 or Chapter 13 bankruptcy, then you’ve probably been informed that you need to take the credit counseling before you can file your petition. But what does that actually mean for you as a debtor? Let’s take a look at five things you should know about the pre-bankruptcy credit counseling requirement.
1. You Can’t File Without It
With very few exceptions, you must take a the credit counseling within 180 days before you file for bankruptcy. If you don’t take the credit counseling and file a bankruptcy petition anyway, your case will be dismissed.
2. Certain Standards Required
There are many credit counseling agencies out there, but only those approved by the U.S. Trustee’s Office will be recognized by the bankruptcy court. That’s why it’s important that debtors choose only approved credit counseling agencies.
3. Bankruptcy Alternatives
The main purpose of a credit counseling is to make sure that you’ve explored all non-bankruptcy options. When you complete the credit counseling, your budget and debts will be examined. You will also learn about alternatives to bankruptcy, such as negotiating with lenders, consolidating debt, and creating payment plans. However, even if your credit counseling agency suggests a repayment plan, you are not obligated to follow it.
4. Certificate of Completion
Once you complete the credit counseling, you will receive a certificate of completion which must be filed with the bankruptcy court. If you file your bankruptcy petition and fail to submit your certificate of completion, your case may be dismissed. So make sure you secure this certificate as soon as possible.
5. Course Flexibility
You can take the credit counseling online or by phone. And there are many inexpensive and professional credit counseling options available. Credit counseling is required to file bankruptcy, so make sure you choose an agency that’s both affordable and professional.
At Ferguson, Hayes, Hawkins & Demay PLLC, we understand how stressful, and confusing the bankruptcy process can be. We have helped many individuals through the process and we are here to help you, as well. If you are considering bankruptcy, contact us to learn more about the process, or to schedule a pre-bankruptcy credit counseling session.