To qualify for bankruptcy relief, you must attend mandatory credit counseling. Unless you are in the military on active duty, have a disability that prevents you from participating or incapacitated in some way, you will have to complete the counseling within 180 days of filing for bankruptcy.
Non-Profit Credit Counseling Agency
The reason for the rule is to see if there is a possible plan to handle your debt without filing for bankruptcy. Sometimes an informal payment plan is enough to get your finances back in order and give you some relief. Even if it is clear you are unable to pay your debts, when your income is lower than what you owe, you are still required to attend credit counseling.
The course can be completed either online or over the phone; you do not have to attend a meeting physically. The agency does, however, need to be approved by the U.S. Trustee’s office.
Receive a Certificate
When you finish the consultation, you will receive a certificate showing that you completed the counseling. If you worked out a repayment plan, you would also receive a copy of that to submit along with your other bankruptcy paperwork.
The law requires that you receive the counseling, it does not dictate whether you accept the proposed plan or not.
Credit Counseling Agencies
Credit counseling agencies must disclose their funding source, such as if the credit card companies provide kickbacks for payments made. They must also disclose what additional fees or amounts you will have to pay if you decide on a repayment plan. You can find a U.S. Trustee approved credit counseling agency on the Department of Justice website.
According to the legal requirements, counselors must be trained to help you with your financial issues, and help you develop a plan without adding to your debt. When you are looking for an agency, ask if the agency has trained the counselors or if they received any additional training outside of the agency. You want to be sure that your counselor is unbiased and competent.
If you have more questions about the credit counseling bankruptcy requirement or other questions regarding bankruptcy, contact a Houston bankruptcy attorney.