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Do You Have to Get Debt Counseling Before Bankruptcy?

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Do You Have to Get Debt Counseling Before Bankruptcy?

Filing for bankruptcy is a process. As part of that process, the bankruptcy law requires that you get a certificate that evidences you did a pre-filing counseling session with an approved agency.

Debt counseling (also called credit counseling) is required before you can declare bankruptcy. There is a pre-filing counseling and pre-discharge counseling.

What is pre-filing counseling?

Before you can file for Chapter 7 or Chapter 13 bankruptcy, you need to do pre-filing counseling. Your bankruptcy attorney can recommend approved agencies that can handle the session and provide the needed certification.

This one-hour course is taught by a nonprofit credit counseling agency and teaches you about the process of declaring bankruptcy — the advantages and disadvantages. It also talks about using repayment plans instead of declaring bankruptcy. The class will teach you about:

  • Using debt management tools
  • Making informal repayment plans with creditors
  • Learning personal budgeting education

What is pre-discharge counseling?

Pre-discharge counseling is your last step in finalizing your bankruptcy. This two-hour course (also called “the second course”) is required before you receive your bankruptcy discharge (the court order that forgives your qualifying debt).

The basic premise for this course is to give you the tools to stay out of debt and manage your finances effectively in the future. Some of the topics that are covered in this class include:

  • Understanding your credit score and using credit carefully
  • Creating and managing a personal budget
  • Learning how to save money/cut expenses

After completing both the pre-filing counseling and pre-discharge counseling, you will receive a certificate that you need to submit to the court to finalize your bankruptcy. Most agencies provide these to your attorney directly.

How do I start the counseling process?

Both types of counseling are available through a nonprofit credit counseling agency that is approved by the Department of Justice. You want to make sure you use an agency approved by the court jurisdiction where your case is filed.

Almost all counseling sessions are over the phone or online, making it easy to have access to an approved agency. Make sure to have your financial information ready when you go for counseling — pull together a basic list of your expenses, debts, and income.

Do I have to pay for it?

You will need to pay for the counseling. The average cost is $15 to $50 per course. Some agencies charge less for online sessions, and many of them will waive fees if you meet criteria specified by the Office of the United States Trustee.

Sawin & Shea – Indianapolis Bankruptcy Attorneys

These two counseling sessions are just two steps in getting out of debt and finding a better financial future. The Indiana bankruptcy attorneys at Sawin & Shea LLC can help you walk through the nuances of the bankruptcy process and advise you on life after bankruptcy.  We are here for you during this life-changing process. Please do not hesitate to call us today at 317-759-1483 or send an email for a free consultation. We are ready to help.

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No upfront attorney fees in qualifying cases. Pay only court filing fee, credit reporting fee, and pre-bankruptcy credit counseling session fee to get a case on file to stop garnishments, repossessions, and certain court actions. Restrictions may apply. Please call to discuss your situation and learn how we can help.