To the tune of much controversy, credit counseling was made a compulsory condition of any individual debtor filing for bankruptcy in the United States following the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). As far as the time needed to complete counseling is concerned, in fairness, the 60 to 90 minutes that is asked of the prospective bankrupt party is a reasonably small concession.
That said, other aspects of clearing the credit counseling requirement are more problematic for someone who has not even really declared yet. For one, barring the assent of the courts to waive the fee, debtors must pay around $50 to take the class and earn the certificate that is filed with the initial petition.
Furthermore, while the session itself takes as much time as watching some movies, this does not take into account the time needed to research a quality state-approved counseling agency.
Debtor education courses, such as credit counseling, are mandated for debtors in the bankruptcy filing process, and based on surface similarities, the two concepts have the tendency to be conflated. However, at their core, debtor education and counseling are two different pursuits.
The time and money requirements are not far off from one another. Usually, debtor education takes more of both, but all the same, they are not huge leaps. Whereas the time required to satisfy these conditions roughly aligns, though, the timing as regards their positions in the process are at opposite ends of the spectrum. Credit counseling is a prerequisite to filing bankruptcy, while debtor education comes after the fact, and as a condition of finalization and discharge of debts.
Counseling and Education Requirements
Discussion of “eligibility requirements” for credit counseling and debtor education may inspire fear in some applicants, but realistically, there are but a few basic premises to follow. As noted above, credit counseling must occur prior to filing for bankruptcy (within six months of filing) and debtor education must be completed at a point after formal confirmation of a plan and prior to discharge of remaining debts.
By this token, they cannot co-occur on the same day. Again, certificates from a licensed counseling agency must also be drafted and included in the act of filing at relevant times in the process. Lastly, the agency with which one works must be approved by an authority or officer of the Federal Government, such as the executive of the U.S. Trustees.
Choosing a Counseling Agency
The top quality to look for in a credit counseling agency is not convenience, but quality itself. Such an assessment may seem too subjective to be that useful, but in faith, there are certain hallmarks of good credit counselors and agencies that transcend personal reviews. It must be stressed that a counseling agency must be approved by an extension of the Department of Justice such as the U.S. Trustee program, and thus part of the decision-making process will involve contacting a representative of a particular bureau.
Debtors should also feel that they can trust the agency and its staff should they sign a contract. This will involve things such as the open disclosure of fees and the training of the agency’s associates, as well as their respect for your privacy by keeping your personal information secure and not sharing it with any third parties.
Exceptions to Counseling Requirement
Though escaping the BAPCPA’s requirement for credit counseling is exceedingly rare, there are situations in which it simply is not possible for a credit counseling certificate to be obtained in the 180 days prior to filing bankruptcy or the five days after the fact. One broad term for events that may take precedence over a credit counseling course are known as “exigent circumstances.” In the context of bankruptcy law, these are scenarios where an immediate danger to one’s livelihood such as foreclosure provide an exception to this requirement.