To those who are unaware, the difference between “credit counseling” and “debtor education” may seem like an exercise in semantics. The two are similar enough that they are often talked about in the same breath when referring to the changes made by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.
The missions of bankruptcy debtor education and credit counseling for consumers are places where these two studies diverge. For credit counseling, the idea is for prospective petitioners to be aware of the risks that await them in declaring bankruptcy, namely what this can do their assets and their credit rating, what alternatives to bankruptcy they have, and what their current financial obligations are and how they manage them moving forward with a repayment plan.
As for debtor education classes, they are designed to guide recovering debtors by helping them to learn how to budget their money, how to avoid debt, and how to responsibly use credit. In other words, while counseling seeks to make sure candidates are ready for bankruptcy, debtor education aims to make sure students never file for bankruptcy again.
For the noted important distinctions to be made between credit counseling and debtor education, though, even on other variables where they are dissimilar, they still are not far off. Whereas counseling sessions are $50 a piece, post-confirmation education classes are potentially as much as $100. Yet in cases of need, both fees may be waived. In addition, debtor education may take up two hours to complete, or about twice as long as a credit counseling session. Then again, two hours is a relatively short time as well. Furthermore, counseling over the phone or online is possible.
