If you’re considering filing for bankruptcy in Kansas City, you’re likely wondering about the requirements involved. One of the key steps is completing a credit counseling course. While this may seem like an extra step, it’s an essential part of the process designed to ensure that bankruptcy is the right solution for your financial situation. In this post, we’ll explain why you need to take the course, what it involves, and how it fits into your bankruptcy filing.
Why Do I Have to Take a Credit Counseling Course Before Filing for Bankruptcy?
The requirement to complete a credit counseling course before filing for bankruptcy stems from the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The goal of this law is to encourage individuals to consider all available options for resolving debt before resorting to bankruptcy. The credit counseling process is supposed to ensure that bankruptcy is truly the best solution for your situation. (Creditors heavily lobbied for this step to be added to the bankruptcy process).
What is Credit Counseling?
Credit counseling is a course that helps you evaluate your financial situation and learn about how to manage your debt moving forward. It’s not just a requirement; it’s an opportunity to take a step back and assess your options for financial recovery.
- Alternative Solutions: You’ll discuss alternatives to bankruptcy, such as debt management plans or negotiating with creditors.
- Personal Budget Review: A counselor will help you review your budget, ensuring that you fully understand your income, expenses, and debt obligations.
- Certificate of Completion: Once you complete the course, you’ll receive a certificate that is valid for 180 days, which must be submitted with your bankruptcy petition.
How Does the Credit Counseling Process Work?
There are several ways to take the course, including online, over the phone, or in person, making it convenient for you regardless of your schedule.
- Online/Phone Sessions: Most individuals complete the course remotely. These are usually self-paced, allowing you to take the class at a time that works best for you.
- In-Person Sessions: If you prefer face-to-face interaction, a few organizations offer in-person counseling at their offices. The cost of this course will be higher than remote options.
The counseling session generally lasts about one hour, during which you’ll review your financial situation and explore the best path forward.
What Happens After Completing the Course?
After completing the course, you will receive your Credit Counseling Certificate, which confirms you’ve met the requirement. This certificate is typically sent to your bankruptcy attorney, who will file it along with your bankruptcy petition and schedules.
- Your Attorney’s Role: Your attorney will ensure that the certificate is filed correctly and in a timely manner.
- Filing Deadline: The certificate must be filed within 180 days before you submit your bankruptcy petition, so make sure to plan ahead.
Choosing the Right Credit Counseling Agency
Not all credit counseling agencies are created equal. The course must be provided by a Department of Justice-approved agency. This ensures that the organization is legitimate and follows the rules set by the U.S. Trustee Program.
- Approved List: Make sure the agency you choose appears on the Department of Justice’s list of approved providers for your jurisdiction before enrolling.
- Fees: Be sure to ask about any fees before starting the session. While there can be variation in pricing, no agency is allowed to charge an additional fee for issuing your certificate.
The Bottom Line:
Credit counseling is a mandatory step in the bankruptcy process, but it’s also a valuable opportunity to understand your finances and consider all possible options for resolving your debt. By completing this course, you’ll be better prepared for what lies ahead in your bankruptcy journey.
How We Can Help:
Navigating the bankruptcy process can be overwhelming, but you don’t have to do it alone. Our Kansas City bankruptcy attorneys are here to guide you every step of the way. From choosing an approved credit counseling agency to filing your bankruptcy petition, we’ll ensure that you’re well-equipped for a successful financial future.
If you’re ready to take the first step toward financial freedom, contact us today for a free consultation. We’ll help you understand the bankruptcy process, including the credit counseling requirement, and support you through every stage of your case.
