Before filing bankruptcy in the Gulf Coast area, you’re required to complete credit counseling. The Federal Trade Commission has created this requirement to help consumers understand their current financial situation and avoid having people with lifelong debt issues. If you are planning to file for Chapter 7 or Chapter 13 bankruptcy, here is what you need to know about these requirements.

Why Credit Counseling is Required

The main purpose of bankruptcy credit counseling is to evaluate your financial situation and confirm that bankruptcy is the right choice. Through counseling, you can discuss your debt issues and find out if there might be other ways to handle them without increasing your monthly bills, liquidating your assets, or further jeopardizing your credit.

Even if it’s clear that bankruptcy is your best option, you still have to go through this process. The federal government made it a requirement to prevent unnecessary as well as repetitive and fraudulent filings. That said, it’s important to understand that everyone who is contemplating bankruptcy has to participate in credit counseling. So, it’s nothing to be ashamed of, and these are courses offered by approved and vetted providers.

Pre-Filing Bankruptcy Credit Counseling

In most cases, you must submit a certificate that verifies your participation in an approved debt counseling course before you can file a Chapter 7 or 13 case with the court. When you sit down with a credit counselor, you will discuss your financial situation and debts in detail as well as any alternatives that you can pursue outside of bankruptcy to regain control.

On average, these sessions last anywhere from 60 to 90 minutes. Some of the topics they cover include:

• A complete and thorough review of your personal finances
• Some of the alternatives to filing bankruptcy
• How to create a personalized household budget

Once your session is complete, the agency will give you a certificate. This is what you’ll need to include with your bankruptcy filing should you decide to move forward with your case.

Post-Bankruptcy Debt Counseling

Before your bankruptcy case can be finalized by the courts, you must complete a second course called “Debtor Education.” This takes place sometime between your filing for bankruptcy and the final order.

This course takes about two hours to complete and generally covers the following topics:

• Using credit responsibly
• Creating a budget
• Managing money

When you receive a certificate of completion, this should be sent to the court. Without it, the court will not be able to finalize your case, and your debts will not be discharged.

Exceptions to the Credit Counseling Requirement

There are a few rare instances in which you may be able to avoid credit counseling. If your bankruptcy trustee determines that there are no approved agencies in your area, you could be exempt. This is unlikely, however, since you can no longer have to complete the requirement in person.

But you may also be able to get an exemption if you can prove that you must file bankruptcy immediately. In some cases, you have to do so to avoid having your home foreclosed. Other reasons you might not be able to complete the requirement include being on active duty in the military in a combat zone or suffering from a serious medical condition that prevents your participation.

How to Find Credit Counseling Agencies

The bankruptcy courts in your jurisdiction will approve the particular courses you have to take. You can choose your own credit counseling agency or ask your attorney for a recommendation. You can locate an approved provider by visiting the U.S. Trustee’s website. Navigate to the link that says “Credit Counseling & Debtor Education” and then find a list that is in your court’s jurisdiction.

You have the option to attend one of these sessions in-person, online, or by phone. Most people now opt for approved online courses. Credit counselors are permitted to charge a reasonable fee for their services. Most sessions are around $50. But, if you can’t afford the fee, the provider is supposed to offer the service at a discount or for free if you fall below a certain income level.

Get Help Filing Bankruptcy in the Gulf Coast Area

If you’re struggling with overwhelming debt and bankruptcy seems like the best solution, we can help. At Gulf Coast Bankruptcy Attorney, we will tell you more about the credit counseling requirements and help you explore the different bankruptcy options to get you the financial relief you need and deserve. Contact us today if you have any questions about Credit Counseling or about any Bankruptcy issues.