Credit Counseling After Bankruptcy
Credit counseling is a two-fold condition you must satisfy before filing or discharging a bankruptcy. Prior to filing, the objective is to explore alternatives and make sure you understand potential consequences. Credit counseling after bankruptcy, also called debtor education, provides information and tools to help you better manage money. After satisfying the debtor education requirement, you receive a debtor education certificate that you file with the bankruptcy court and proceed to the discharge phase of your bankruptcy.
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The Facts
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Credit counseling after filing bankruptcy is a single-session course lasting about two hours. The curriculum for this course includes topics such as planning and creating a personal budget, general money management information, getting and using credit, discussions about credit card debt, the importance of saving and making smart financial decisions. In addition, you receive information about personal finances resources and tools you can use to improve money management skills. Methods for completing the course depend on the agency you choose, but they can include in-person attendance or participation online or via telephone.
Exceptions
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With few exceptions, credit counseling after filing bankruptcy and before your bankruptcy discharge is a strict requirement. However, the United States Bankruptcy Court identifies three extenuating circumstances that may excuse you. One is the inability to make a rational decision. A second is a disability that impairs you to the extent you cannot participate in any available counseling option. The third is being in active duty military serving in a combat zone.
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Availability
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Unless you live in Alabama or North Carolina, the counseling agency you choose must be on a Department of Justice provider list. Alabama and North Carolina residents select a counseling agency from a similar, Bankruptcy Administrators provider list. In both cases, agencies that receive approval to conduct after-bankruptcy counseling undergo a thorough policy and procedure review and receive instructions on how to conduct the session. You can obtain a list of approved agencies from your bankruptcy trustee or by visiting the U.S. Trustee website.
Cost
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Although there is a charge for the counseling session, the agency you choose must waive the fee if you provide evidence that you cannot afford to pay. This involves a comparison of you and/or your family's gross monthly income (before-tax income) to the most current Department of Health and Human Services Federal Poverty Level guidelines. As an alternative, if you are represented by an attorney providing her services pro bono (without a fee), the agency you choose will waive the counseling fee.
Considerations
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You should follow Federal Trade Commission recommendations and select your counseling agency carefully. If you believe you qualify for a fee waiver, inform the agency before signing up for the credit counseling session. After-bankruptcy counseling is only one of many services each agency provides. You are under no obligation to purchase additional services or sign up for additional counseling sessions.
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