Filing Bankruptcy is still an option for getting out of debt. However, The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 has made filing to enter bankruptcy protection a longer process.
Credit Counseling and Debtor Education Are Required
Credit Counseling and Debtor Education requirements are perhaps the two biggest changes to filing bankruptcy that came out the bankruptcy law changes in 2005. For most people who plan to file for bankruptcy protection the process requires participation in a credit counseling program from a government approved company.
This credit counseling program is also referred to as pre-bankruptcy credit counseling. Upon completion of the program, you will receive a certificate that you are required to provide when you file your bankruptcy paperwork to the bankruptcy court. The counseling must be completed 6 months before you actually file your paperwork.
The education program that you are required to have is called pre-discharge debtor education. When you complete this course you will get a certificate, or evidence of completion, of debtor education that you must present to the bankruptcy court before your debts can be discharged. If you fail to complete this program your bankruptcy can be thrown out or dismissed and refiling could be more difficult the second time around. Again, you may only get this education from a government approved agency.
The U.S. Trustee Program, which administered by the U.S. Department of Justice, is the authority in approving agencies and companies to deliver both of these educational programs. To offer these programs, a company must be on an approved list. The certificates for completion of both of these courses are handled from one central location and are numbered to prevent fraud.
Pre Bankruptcy Counseling and Debtor Education What Do They Cover
As mentioned before, you must complete this counseling session with an approved credit counseling organization before you file for bankruptcy. Once your paperwork has been filed, but before your debts can be discharged you must complete the debtor education session. The counseling session will include an overall discussion and evaluation of your personal finances, the types of bankruptcies, alternatives to bankruptcy, and draft up some type of personal or household budget. The debtor education covers information regarding developing a personal or family or household budget, money management techniques, how to use your credit wisely, amoung other topics.
The Counseling and Education Cost Money
Companies can and do charge for these sessions. Typically sessions cost anywhere from $30-$50 each with some type of discount if the sessions are purchased from the same company. However, companies who are approved to give this education by the U.S. Trustee Program are required by law to offer them for free to anyone who completes a waiver and meets federally specified requirements for not being able to afford to pay the fees for either of these courses. To apply for a waiver, the company you choose to work with for these courses will have information available to you - all you have to do is ask for the information.
Where Do I Find An Approved Company?
The best place to look for an approved company is on the U.S. Department of Justice's website under the U.S. Trustee Program. Go the USDOJ website to see an approved list.
Even though the laws for filing bankruptcy have changed, people are still filing bankruptcy as a way to find relief from their debts. If you are going to file bankruptcy, make sure that you start early and get the necessary pre-bankruptcy education counseling 6 months ahead of time. Otherwise you might have to wait.
