Bankruptcy Counseling - What You Should Know!

Bankruptcy Counseling

Bankruptcy counseling is education concerning the right application of bankruptcy law to favor you. The purpose for this is to prevent bankruptcy abuse. In the past, there were some people who were using the policy in the wrong way and as a result, the government established the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005. Unless stipulated otherwise by a court of law, anyone seeking to file bankruptcy petition is supposed to attend credit counseling in a government approved institution. Petitioners are also supposed to take a debtor educational course before their debts are forgiven.

There are a number of accredited institutions to provide the compulsory counseling and debt education. There are also a number of experts who are licensed to provide the counseling and education. When clients are seeking the counseling experts, it is essential to seek assistance of an attorney since there are some states where counseling experts have to be approved by bankruptcy administrators.

Credit Counseling and Debt Education

Although bankruptcy petitioners are supposed to take credit counseling and pre-discharge debtor education before any of the debts are eliminated, they cannot be taken at the same time. The credit counseling is supposed to be taken before one files for bankruptcy, but debtor education needs to be taken after filing the petition.

In a nutshell, when filing a bankruptcy petition, it has to be accompanied by a certificate showing that you have completed credit counseling. Clients are supposed to look for approved, trusted organizations and certified individuals as a provision of this type of education; otherwise, the certificate will not be recognized by the court. Immediately after filing the bankruptcy, clients are required to apply for debtor education course. The certificate acquired after successfully completing this course is essential since you cannot have debts forgiven before completion of this course.

The certificates are issued through a trustee program. These certificates are made through a central automated system and numbered. This helps in prevention of fraud since all certificates are standard and everyone has to follow the same set of regulations before they are awarded with the certificates.

Pre-Bankruptcy Counseling

This session is held between a client and a licensed credit counseling organization. It can either be done online, through telephone or personally. The main topics discussed are determinations of alternatives to bankruptcy, assessment of your personal financial status and a personalized budget plan.  A typical discussion takes roughly about 1 to 1.5 hours.

The bankruptcy counseling fee is ordinarily about $50; but in cases where the clients cannot raise the required amount, a waiver of the fees is provided. Nonetheless, you should request the organization providing the education to eliminate the fees before you start the learning session. Failure to make the request in advance implies that you are comfortable with making the payment. The total cost of the counseling education depends on a number of factors such as types of services received, where you live, among other factors.

After completion of the course, ensure that you receive a certificate from an accredited institution in the jurisdiction where you are applying the petition. This information can be acquired online regarding institutions that can provide the required education. In many institutions, there is no extra fee required to be awarded with a certificate.

After-Filing Debtor Education

This is offered after bankruptcy has been approved. The importance of this education is to help the petitioner develop skills in making a good, useful budget, using credit wisely, management of money and smart management of other resources. Just like pre-filing counseling, the education can also be done over a phone line, online or in person. The training session here lasts a little bit longer- up to 2 hours. The charges for the services can range from$50 to $100. There is also a free counseling session provided by some educational organizations upon request. It is also essential to ensure the organization attended is recognized by the courts in the jurisdiction you are filing the petition.

Successful completion of post credit counseling education will see you awarded with a second certificate to prove that you have successfully completed the course. Unless you were informed about extra charges, there is normally no extra fees charged for the certificate.