Credit counseling and post-bankruptcy debtor education courses must be taken by every individual that files for Chapter 7 bankruptcy or Chapter 13 bankruptcy, with few exceptions.
PRE-BANKRUPTCY CREDIT COUNSELING
The pre-bankruptcy credit counseling class includes information on credit counseling opportunities, and provides assistance in performing a budget analysis. This consumer bankruptcy counseling is an opportunity to understand the personal budget process, and learn simple ways of tracking income and expenses.
Why is this important? As Dave Ramsey writes:
A budget tells you what’s coming in and what’s going out. People who operate on a budget know exactly what’s going on with their money.
In other words, a budget is a tool for analyzing the flow of money. Every successful business has a budget, and most budgets are prepared with some outside help. The credit counseling course will provide that help to you.
We encourage our clients to participate in the credit counseling and budgeting class as a valuable opportunity to understand how to track their money, and where it goes.
The pre-bankruptcy counseling must be received within 180 days prior to a bankruptcy filing.
As an additional benefit, you’ll also become familiar with the income and expense categories that will be used when on the bankruptcy schedules.
POST BANKRUPTCY DEBTOR EDUCATION
In addition to pre-bankruptcy credit counseling, every individual that files for bankruptcy must receive a financial management instructional course.
Although there are limited exceptions, this course must be taken in every personal bankruptcy prior to the entry of a discharge of debt.
The financial management instructional course, commonly referred to as post-bankruptcy debtor education, is focused on establishing good financial practices after bankruptcy, and working to avoid debt issues in the future.
Again, the importance of budgeting is emphasized, together with other aspects of managing household finances.
HOW TO OBTAIN PRE-BANKRUPTCY CREDIT COUNSELING AND POST BANKRUPTCY DEBTOR EDUCATION
The pre-bankruptcy credit counseling class must be received in a separate session from the post-bankruptcy debtor education class.
Both classes must be taken from a non-profit agency that has been approved by the United States Trustee.
There are numerous agencies that have been approved for credit counseling and debtor education. The costs are low, starting at about $5.00 per individual for a counseling session that might last an hour or so.
The classes can be taken in person, by telephone, or on the internet. Most of our bankruptcy clients prefer to obtain the counseling online.
When the time comes, we’ll recommend an agency or two that have provided useful information to our clients.
The Takeaway
The credit counseling and debtor education courses provide useful information and tools for managing your money, and making the most of the fresh start that you’ll receive following the discharge of debt.
The information you’ll learn is valuable before making a final decision whether to file personal bankruptcy, and while making financial decisions after you receive your discharge, and your fresh start in life.
