Is credit counseling a bankruptcy requirement?

On behalf of The Rollins Law Firm posted in Personal Bankruptcy on Saturday, March 28, 2015.

If you are struggling with overwhelming debt in Mississippi, bankruptcy is process that provides meaningful debt-relief solutions. You can address multiple sources of debt at one time, eliminating the debt or reorganizing it into a single affordable plan based on your ability to pay. During the process, you receive protection from creditor calls and collection activity.

Bankruptcy is a powerful tool for debt relief, but it is also a federal program. As with any other government programs, there are a significant number of rules and requirements by which you must abide. Credit counseling is one of them.

The Department of Justice provides some important details about the credit counseling requirement codified under U.S.C. § 109(h):

  • Timing: Consumers must obtain counseling before filing for Chapter 7 or Chapter 13. A typical counseling session lasts approximately one hour.
  • Location: The United States Trustee Program keeps and updates a list of approved counseling agencies. You can choose an agency that is located in your jurisdiction for in-person counseling. There are also alternative options available for completion, including telephone, live chat or email.
  • Debtor education: Credit counseling and debtor education are two separate programs. You must complete debtor education after filing for bankruptcy.
  • Joint sessions: If you and your spouse are filing a joint bankruptcy petition, you can complete the counseling session together.
  • Cost: Counseling costs money. Agencies must provide information about reduced fees or free services if you cannot pay for the counseling. Your attorney is also allowed to make payments on your behalf.
  • Duty: The agency is required to provide counseling services not legal advice. The agency should not provide information regarding when or if you should file for bankruptcy.

These are only general guidelines, and there are exceptions to these rules. You should always consult with a bankruptcy attorney for legal advice based on your particular financial situation.

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