What is Pre-Bankruptcy Counseling?

Pre-Bankruptcy Counseling

Most bankruptcy cases require that you have credit counseling in a specified number of days before you can file the bankruptcy protection order in court. You will also be forced to complete a course on debt management before your debts are discharged. This is the court’s way of ensuring that you learn better financial responsibility and make better choices so that you do not find yourself in a similar situation in the future.

Bankruptcy counseling and education requirements also are there to ensure that consumers have exhausted all options available before filing bankruptcy. This reduces the chances that they will file for bankruptcy again.

The United States government must approve all counseling organizations offering pre-bankruptcy counseling for that counseling session to qualify in bankruptcy court. Through the United States Trustee Program, a credit counseling company will be authorized to operate in the state.

Understanding the Requirements for Pre-Bankruptcy Counseling and Education

Debtor education is not just a benefit to the court; it is also an advantage for you. It helps you better understand what led to your bankruptcy situation. Even if you fell on hard times, it is important to understand the bankruptcy process and better financial practices so that you can avoid this in the future.

Credit counseling is a requirement before filing for bankruptcy, while your education courses are done after your attorney has filed. Your attorney can direct you to court-approved counseling and teaching courses in the area.

Once you have completed the pre-bankruptcy counseling requirement, you will have a certificate that your attorney will file with your petition to file bankruptcy; this shows the court that you have met all pre-filing requirements.

How Credit Counseling Works

The pre-filing credit counseling with your order includes a course on:

  • Reviewing your finances. Instead of using general examples, these courses are designed to examine your personal finances and look for future solutions. They will take an hour or so, and sometimes they are done online or over the phone, depending on the requirement. The counselor will review your finances to help determine what went wrong, and help you find solutions to avoid the same problems later.
  • Discussing alternatives. Your counselor will also examine potential alternatives to bankruptcy since bankruptcy is only meant to be a last resort for those who have exhausted all other options.
  • Personalized budget plans. In addition to learning where you went wrong, your credit counselor will set up a personal budget with you that includes your income and expenses. This will help you manage your money better.

You are required to pay for the pre-filing counseling session, which is usually not an expensive fee.

Speak with a Bankruptcy Attorney About Your Pre-Bankruptcy Requirements

Every bankruptcy case is different; therefore, it is best if you talk to an attorney about your personal bankruptcy.

An attorney from Hames, Anderson, Whitlow & O’Leary, P.S. can assess your financial situation and determine which bankruptcy filing is best for you – then, we can help you find the right pre-filing counselor as well as post-filing education.

Schedule a consultation today at 509-586-7797 or request your appointment online.