Debt Counseling for Bankruptcy

Many of those who have fallen trapped on heavy debt have misused the filing of bankruptcy protection. In reaction to this, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was passed. This law mandates that the businessman seeking to file bankruptcy protection should first undergo debt counseling or pre-bankruptcy counseling.

Read this article to know more about it.

There are many businessmen who fall into heavy debt and try to follow the way of filing for bankruptcy in their attempt to get out of a loan they have incurred. To counteract any misuse of the filing for bankruptcy option open for businessmen, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was passed and has launched a new era in the business industry. This Act of 2005 mandates, with limited exception, that people who are planning to file for bankruptcy protection must first get credit counseling. These people or businessmen can get this debt counseling only from a government-approved organization. This must be done 180 days before the filing of bankruptcy protection that will discharge their debts.

This credit counseling can be called pre-bankruptcy counseling. But what happens in this process of pre-bankruptcy counseling? Below are some important information and guidelines on this debt counseling for bankruptcy.


The rule of this debt counseling for bankruptcy is that pre-bankruptcy credit counseling and the process of pre-discharge debtor education cannot happen at the same time. Credit counseling must happen prior to the filing of bankruptcy protection. Meanwhile pre-discharge debtor education happens after the filing.


In the debt counseling for bankruptcy, or what is called pre-bankruptcy counseling, the accredited organization will include three concerns. The first one is the evaluation of personal financial situation. The second one is a discussion of alternatives for pursuing bankruptcy. And, lastly, a detailed personal budget plan.

The good thing about debt counseling for bankruptcy is that the businessman can do it in many ways. He can seek counseling through personal one-on-one counseling, through phone, or even through online counseling. The session can usually last from 60 to 90 minutes.

For those who have no capacity to pay the credit counselors, they should request for a waiver of fee from the organization doing the counseling. If no waiver was requested from the organization, the one who seeks counseling will be charged $50 on average.

Once the debt counseling for bankruptcy has been done, the businessman is ordered to get a certificate of proof of pre-bankruptcy counseling. One should double-check with the U.S. Trustee’s website to verify whether the organization who held the counseling is accredited by the state where the counseling happened. The certificate of proof is free of charge.


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