Even if you have made the final decision to file, you cannot get started just yet. Instead, it is required that you first go through pre-bankruptcy credit counseling. The reason for this is simple: the court wants you to consider other options, outside of bankruptcy, for handling your debt.
Note: you are unable to qualify for bankruptcy unless you can prove that you received credit counseling from an approved agency within a six month period before filing. Upon completion, you will receive a certificate from the agency.
Through credit counseling, you will get a better idea of whether or not bankruptcy is your only option. You may find that another strategy, such as debt consolidation, is the better choice for the time being.
The law requires that you take part in credit counseling. It does not require that you agree with or follow along with any plan proposed by the agency. Even so, if the agency comes up with an alternative plan to bankruptcy, you are required to include it in your filing.
The Cost of Credit Counseling
Since you are in a bad financial situation, you don’t want to spend money without considering its impact.
Agencies have the right to charge for their services, however, if you are unable to afford the fee, they must offer the service for free or at a discounted rate.
Note: The Office of the U.S. Trustee notes that a reasonable fee for pre-bankruptcy credit counseling should fall between free and $50. In other words, you will not be stuck paying hundreds or thousands of dollars for the service.
Do you have questions about pre-bankruptcy credit counseling? We can help you better understand this process, including what to expect along the way. Contact us for professional advice and answers to all your questions.