Before you file for either a Chapter 7 bankruptcy case or a Chapter 13 bankruptcy case, a credit counseling class from an approved credit counseling agency must first be completed. Commonly referred to as the “pre-bankruptcy class,” the credit counseling class is mandated by the bankruptcy code. A certificate is issued once the class is completed, and the certificate is filed along with your bankruptcy documents with the court. The certificate, however, is only good for 180 days. As a result, I usually have clients take the class and obtain the certificate shortly before they plan on filing either their Chapter 7 bankruptcy case or Chapter 13 bankruptcy case, to ensure that the clients do not take the class too early; if the 180 day period passes and a bankruptcy has not yet been filed, clients will be required to take the class again.
The Bankruptcy Code mandated that the credit counseling class is completed as part of a bankruptcy case filing (both Chapter 7 and Chapter 13 bankruptcy cases), yet the government does not offer these classes. The private sector has answered the call, and now there are many providers of this class. A list of providers is published by the United States Trustee Program.
What is the purpose of the credit counseling class as part of either a Chapter 7 or Chapter 13 bankruptcy filing? The stated purpose is to provide the consumer with an idea if bankruptcy is right for him or her, or if there are alternative routes that can be taken, even when it is clear that bankruptcy is the best or, possibly, only option available for the consumer.
The credit counseling course generally takes an hour to complete, and can be taken over the internet, by phone, or in person depending on the course provider. As part of the course, the consumer will list items such as income and expenses and debts. The credit counseling agency will then analyze the information supplied by the consumer and propose options of repaying the debt, outside of bankruptcy, if such options make sense. Often, the conclusion of the course provider is that bankruptcy may be the best option. And despite a proposal for a non-bankruptcy repayment plan by the counseling agency, the consumer can still choose the route of bankruptcy, if this proves beneficial.
If you are interested in learning more about Chapter 7 bankruptcy and Chapter 13 bankruptcy and the educational requirements leading up to filing a bankruptcy case, please call for your free in-office bankruptcy consultation in Eugene.