Bankruptcy Law

The Pre-Bankruptcy Credit Counseling Requirement and What Filers Need to Know

All bankruptcy filers are required to take and complete two educational courses before receiving a final bankruptcy discharge. These courses are required for both Chapter 7 and Chapter 13 filers. It is important that individuals considering bankruptcy be aware of these requirements for their cases to be successful.  

At the start of a bankruptcy case, the individual filing must meet certain requirements. The filer must disclose his or her complete financial picture by submitting required bankruptcy financial declarations. He or she must also pay a filing fee, request a fee waiver, or request an installment payment for the fee. Lastly, the individual must submit proof that he or she received credit counseling from an agency approved by the U.S. Trustee’s office. This proof of completion must show that the course was taken within 180 days prior to filing.

Pre-bankruptcy credit counseling helps determine whether bankruptcy is necessary. Granted, bankruptcy law only requires the consumer to participate in the counseling program. This participation does not mean the person has to do everything recommended to him or her. However, if the credit counseling agency prepares a debt repayment plan for the consumer, and the bankruptcy court views the repayment plan as something the filer could feasibly do, they may use this repayment plan in an effort to push the person from proceeding with a Chapter 7 bankruptcy case to filing a Chapter 13 case.  

A list of approved credit counseling courses and agencies can be found on the U.S. Trustee’s website. These agencies can charge a reasonable fee for their services, but if the filer is not able to pay the fee and falls below a certain income threshold, the agency must either provide the services for a reduced rate or for free. 

The second credit counseling required by bankruptcy courts is called debtor education. This course must be completed after filing for bankruptcy. The purpose of this second course is to give the filer resources and tools to help him or her create a budget, rebuild his or her credit after bankruptcy, and avoid falling into the same situation again.  Proof of completion must be provided by the filer within 60 days of date first set for the case’s meeting of creditors 

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If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.   

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