What Is The Pre-Filing Credit Counseling For Bankruptcy?

The pre-filing credit counseling course is a mandatory requirement for individuals filing for bankruptcy in the United States. This requirement was established under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) to ensure that individuals seeking bankruptcy relief are fully informed about the process, the consequences of bankruptcy, and potential alternatives to bankruptcy.

Purpose of the Pre-Filing Credit Counseling Course

The primary objectives of the pre-filing credit counseling course are to:

1. Educate Debtors: To provide debtors with a better understanding of financial management, helping them make informed decisions about bankruptcy and its alternatives.
2. Evaluate Financial Situation: To assess the debtor’s financial situation thoroughly and explore all possible options for handling their debt, including budget adjustments, debt management plans, and other non-bankruptcy alternatives.
3. Fulfill Legal Requirements: To comply with the legal prerequisites for filing for bankruptcy, ensuring that the debtor has considered all alternatives before deciding to proceed with the bankruptcy filing.

Key Features of the Course

• Approval: The course must be taken through a credit counseling agency approved by the U.S. Trustee Program (or the Bankruptcy Administrator in North Carolina and Alabama).
• Timing: It must be completed within 180 days before the bankruptcy filing date.
• Content: The course covers topics such as budgeting, managing money, using credit wisely, and understanding the consequences of bankruptcy.
• Format: The course can be taken online, over the phone, or in person, depending on the provider’s offerings.
• Duration: The course typically lasts about 60 to 90 minutes.
• Certificate of Completion: Upon finishing the course, the debtor receives a certificate of completion, which must be filed with the court along with the bankruptcy petition.

After Completing the Course

Once the course is completed and the certificate of completion is obtained, the debtor can proceed with filing for bankruptcy. The certificate is a necessary document that must accompany the bankruptcy petition. Failure to complete the course or to provide the certificate can result in the dismissal of the bankruptcy case.

Post-Filing Requirement

In addition to the pre-filing credit counseling course, debtors are also required to complete a debtor education course after filing for bankruptcy but before debts are discharged. This post-filing course focuses on personal financial management and is intended to help individuals avoid future financial difficulties.

The pre-filing credit counseling course is a critical step in the bankruptcy process, designed to ensure that individuals are making well-informed decisions about their financial futures. By requiring debtors to explore all available options and understand the implications of bankruptcy, the course aims to promote responsible financial behavior and reduce the likelihood of future bankruptcies.