You must consult a credit counseling agency before filing for consumer bankruptcy (such as Chapter 7 or Chapter 13). The purpose of such a consultation is to determine whether you can contend with your debt without filing for bankruptcy or adding to your financial load. In this brief guide, you will learn more about the pre-bankruptcy credit counseling process. Requirements for Counseling To be eligible for bankruptcy, you must prove that you received help from a US Trustee approved credit counseling service. Once the process is finished, the service will give you a completion certificate to file with the bankruptcy court. You will also receive a copy of your repayment plan, if applicable. To find out which agencies are approved in your area, Ostensibly, credit counseling is intended to help you determine the necessity of your bankruptcy filing – or whether a repayment plan would suffice. Even if you cannot adhere to a repayment plan, or if you believe that some of your debts are unfair, you must still receive counseling. If the agency puts together a repayment plan, you must file it in bankruptcy court. The Cost of Credit Counseling These agencies may charge reasonable fees, but must provide low- or no-cost services to those who cannot afford them. The Trustee’s office has determined that reasonable fees can range from $0 to $50. Credit counseling services must either waive fees or offer a sliding scale if you meet certain income criteria. Exceptions If the Trustee determines that there is no appropriate counseling service in your judicial district, you are exempt from the requirement. However, online and phone services are widely available, making this exemption rare. You may avoid the credit counseling requirement if you can prove that:
- It was necessary to file immediately
- You could not get counseling within five days of your request
