What Are the Credit Counseling Requirements During Bankruptcy?

 Posted on December 28, 2021 in Bankruptcy

If you are considering bankruptcy, you have most likely been placed in a difficult financial position due to circumstances beyond your control. While most people have some debts, they will often do everything they can to meet their financial obligations. However, a person or family may encounter issues such as the unexpected loss of a job or a serious illness that leads to large medical bills while also affecting a person’s ability to earn an income. In these cases, debts may become unmanageable, and bankruptcy may be the best option for debt relief. Even though a person or family will usually be aware of the reasons why they are in this situation, a debtor will be required to receive credit counseling during the bankruptcy process.

Credit Counseling and Debtor Education

The U.S. Bankruptcy Code requires debtors to complete two types of counseling during the bankruptcy process. These forms of education are meant to help debtors understand the issues that may have led them to experience financial difficulties and encourage them to follow practices that will allow them to maintain financial stability in the future. Prior to filing for bankruptcy, a debtor will need to complete credit counseling, and before discharging their debts, they will be required to take a debtor education course.

Pre-bankruptcy credit counseling must be completed before a debtor files a petition for bankruptcy. This counseling may be completed in-person or online through an approved agency, and it will usually take around an hour. During counseling, the debtor will review their finances, discussing their income, expenses, and debts. The counselor may advise the debtor of potential alternatives to bankruptcy and help them create a workable budget that will allow them to maintain financial stability going forward. After completing the course, the debtor will receive a certificate of completion that will be filed along with their bankruptcy petition. This certificate will be valid for 180 days.

Debtor education must be completed before debts can be discharged during the bankruptcy process. As with credit counseling, this course may be completed in-person or online, and it will usually take around 90 minutes to two hours. Debtor education will focus on proper financial management, including how a person can maintain a workable budget, manage income and expenses, and use credit responsibly. After completing the course, a debtor will receive a certificate of completion that will be filed in bankruptcy court, allowing for the discharge of their debts.

Contact a San Antonio Bankruptcy Process Lawyer

If you are considering bankruptcy, you will want to be sure to understand all of your requirements and the steps that you will need to follow to receive relief from debt. At the Law Offices of Chance M. McGhee, we will provide you with experienced guidance during the bankruptcy process, including answering any questions you may have about your credit counseling requirements. We will also make sure all documents are filed correctly, ensuring that you will be able to complete your bankruptcy as quickly and efficiently as possible. Contact our Schertz bankruptcy and debt relief attorney at 210-342-3400 to schedule your free consultation today.

Sources:

https://www.justice.gov/ust/credit-counseling-debtor-education-information

https://www.consumer.ftc.gov/articles/0224-filing-bankruptcy-what-know

https://www.uscourts.gov/services-forms/bankruptcy/credit-counseling-and-debtor-education-courses