New Info You Must Know Before Filing for Personal Bankruptcy 

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 significantly changed the consumer bankruptcy process. With rare exceptions, people planning to file for bankruptcy protection must first get credit counseling from a government-approved organization within six months of their filing date. They also must complete a debtor education course to have their debts discharged. The Department of Justice’s U.S. Trustee Program (www.usdoj.gov/ust) approves the organizations allowed to provide this mandatory credit counseling and debtor education. By law, this program does not operate in Alabama or North Carolina (court officials called Bankruptcy Administrators approve pre-bankruptcy credit counseling and debtor education providers). 

Counseling and Education Requirements

As a rule, credit counseling must take place before you file and debtor education must take place after you file. In general, you must file a certificate proving your completion of credit counseling when you file for bankruptcy, and you must file evidence that you have completed debtor education after filing (but before your debts are discharged). Only the government-approved organizations may issue these certificates. 

Pre-Bankruptcy Counseling

A pre-bankruptcy counseling session should include an evaluation of your personal financial situation, a discussion of alternatives to bankruptcy, and a personal budget plan. A typical counseling session lasts an hour or so, and can take place in person, on the phone, or online. The counseling organization is required to provide the counseling free of charge to those who cannot afford to pay and request a fee waiver before the session begins. Otherwise, the fee will be about $50, depending on where you live, the services you receive, and other factors. The counseling organization must discuss any fees with you before starting the counseling. When you have finished the counseling, you must get a certificate of completion. Counseling organizations may not charge an extra fee for the certificate. 

Post-Filing Debtor Education

A debtor education course should include information on developing a budget, managing money, using credit wisely, and other useful resources. Debtor education may be provided in person, on the phone, or online. This session might last longer than the pre-filing counseling—about two hours—and the typical fee is between $50 and $100. Seek a waiver if you cannot afford the fee. Once you have completed the debtor education course, you should receive a certificate as proof, which is separate from your credit counseling certificate. Debtor education providers may not charge an extra fee for the certificate. 

Choosing Organizations for Credit Counseling and Debtor Education

You’ll benefit by doing some research when choosing a credit counseling or debtor education organization. Make sure you choose services only from approved providers for your judicial district by checking with the bankruptcy clerk’s office handling your filing. Once you have your list of approved organizations, call several to gather information before deciding. Some questions to ask are: 

• Will you help me develop a plan for avoiding problems in the future?
• What are your fees? What if I can’t afford to pay your fees?
• What qualifications do your counselors have? Are they accredited or certified by an outside organization? What training do they receive?
• What do you do to keep information about me (including my address, phone number, and financial information) confidential and secure?
• How are your employees paid? Are they paid more if I sign up for certain services, if I pay a fee, or if I make a contribution to your organization?

If you have concerns about approved credit counseling agencies or debtor education providers, such as the failure to provide adequate service, please contact the U.S. Trustee Program by email at USTCCDEComplaintHelp@usdoj.gov, or in writing at Executive Office for U.S. Trustees, Credit Counseling and Debtor Education Unit, 20 Massachusetts Avenue, N.W., Suite 8000, Washington, D.C., 20530. Provide as much detail as you can, including the name of the credit counseling organization or debtor education course provider, the date of contact, and with whom you spoke.