What kind of credit counseling will I need to complete before filing for bankruptcy?

If you are burdened by oppressive debt, bankruptcy may be the tool you need to start a fresh financial life.  In most cases, Chapter 7 filers will need to complete credit counseling within 180 days before filing for bankruptcy.  You will also need to complete an educational course on debt management before your debts can be discharged in Chapter 7 bankruptcy.  Our Ohio Chapter 7 bankruptcy attorneys discuss some facts you should know about the credit counseling requirement for filing for bankruptcy.  

Requirements for Credit Counseling

Anyone filing for Chapter 7 bankruptcy must complete two certificates, a pre-filing credit counseling one and an educational course pre-discharge.  These certificates must come from an approved consumer credit counseling agency.  In most states, the U.S. Trustee Program is responsible for approving the credit counseling organizations, while in a few states the bankruptcy administrator will approve the organization.  

What to Expect During the Credit Counseling Process

Your pre-bankruptcy credit counseling will typically begin with a review of your personal finances.  This will include an analysis of your current income and a list of all of your unsecured debts.  Your bankruptcy counselors will then discuss your alternatives to bankruptcy.  Alternatives could include debt management, debt consolidation, or negotiation with your creditors.  Counselors will ensure you understand the consequences of filing for bankruptcy, which could include a mark on your credit report for up to ten years.  Lastly, your counselors will help you with the creation of a personal budget plan.  Your budget will carry you through the bankruptcy and beyond.  

The credit counseling process will take about an hour and prices vary by state.  Your bankruptcy attorney can assist you in finding an approved and effective credit counseling course in your area.  You can ensure you get the most out of the process by coming in prepared with records of your finances and focusing on the information provided.  

What to Expect During Pre-Discharge Counseling

After you file for bankruptcy, you must complete a pre-discharge education course.  The course will take about two hours and is approved by the Justice Department.  The course will discuss budgeting, credit scores, and more. You will complete a test to measure your knowledge of the topics and you will have the chance to ask questions to counselors via live chat.