Bankruptcy Credit Counseling

Bankruptcy Credit Counseling

 In 2005, Congress made sweeping changes to the Bankruptcy Code under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA).  This 195-page bill modified some of the provisions of the Bankruptcy Code while also adding additional requirements and conditions for debtors to file bankruptcy and to receive a bankruptcy discharge.  One of the additions was the requirement that debtors must complete a pre-bankruptcy credit counseling course.

 Taking Your Bankruptcy Credit Counseling Course

 The bankruptcy credit counseling course must be completed before you file your bankruptcy case.  A certificate certifying that you have completed the course with an approved credit counseling company must be filed with your bankruptcy petition.  Certificates must be dated within 180 days from the date of the bankruptcy filing.  If your certificate expires, you must take the course again and obtain a new certificate. Credit counseling companies must be approved by the U. S. Trustee’s Office.  A list of the approved companies is located on the UST’s website organized by state.  The list of approved credit counseling companies may change at any time; therefore, you should always verify that the company you choose is on the UST’s approved list.

Each company must include specific information in the bankruptcy credit counseling course as set forth by the UST’s office.  Courses must include an evaluation of your current financial situation, a discussion of the factors that caused your current financial situation, and a discussion of the various alternatives to resolve your credit problems.  During the course, the agency must include a budget analysis, educational materials, and alternatives to filing bankruptcy. 

Bankruptcy credit counseling courses are designed to take between 60 to 90 minutes to complete. Companies offer courses in person, by telephone, and online as well as in several different languages. Fees vary by company and can be as high as $50 per person.   If you and your spouse are filing a joint bankruptcy case, each of you must complete the credit counseling course and receive a certificate in your name.  It is important to ask if the company charges a fee for each person taking the course or if the fee covers both spouses. Many companies now charge one fee that includes both spouses.

If you cannot afford to pay the fee for your bankruptcy credit counseling course, there are provisions in place to waive the fee in certain circumstances.  You must discuss waiving the fee for the bankruptcy credit counseling course directly with the company prior to taking the course.

Can the Bankruptcy Credit Counseling Requirement be Waived?

The requirement to complete a bankruptcy credit counseling course prior to filing bankruptcy is very rarely waived; however, there are limited situations in which the court may grant a waiver of the requirement.  If the debtor has a physical or mental incapacity or the debtor is serving in the military in an active military combat zone, the court may grant a waiver of the requirement.  The debtor’s attorney must file a motion with the court requesting an order granting the waiver.