Dealing With The Credit Counseling Requirement in a Bankruptcy Filing

A magical reset button - that's what most people think of bankruptcy. This is far from the truth. Because of its true nature - a legal mechanism - navigating around and through bankruptcy is too complicated to be done successfully without help. Until they consult a lawyer, most people are not even aware of the credit counseling requirement that comes with bankruptcy filing.

Required Counseling

No more than 180 days before filing, anyone wishing to file for Chapter 7 or Chapter 13 bankruptcy must consult with a credit counseling agency approved by the US Trustee's office. This requirement is meant to prevent the courts from being unnecessarily tied up and full by stopping people, who are capable of paying their debts without bankruptcy intervention, from filing.

The government website,, helps anyone in locating an approved agency nearest to them. Credit counseling agencies are allowed to charge for their services, however, they are required to offer you discounted rates if you demonstrate your inability to pay. The agency will review your situation and work with you to create a payment plan suitable to your current financial situation. When filing for your bankruptcy case, you are required to submit with it the certificate that you will receive upon completion of the counseling course. You must also supply the payment plan (if you have created one) to the court.


Although a counseling agency may work with you to create a repayment plan or budget, you are never under obligation to comply with it. However, when you submit to the court as part of your bankruptcy requirements, the court may rule you ineligible for bankruptcy simply because the plan is reasonable enough to follow. This is why bankruptcy is not a "reset button" for unhappy financial situations.


There are some exceptions to this rule:

• The credit counseling requirement may be waived if there is no approved counseling agency available to you. However, this is unlikely because counseling can be conducted over the phone.

• You can demonstrate a need to file for bankruptcy immediately.

• You can demonstrate mental incapacity or if you are on active duty in a combat zone.

Bankruptcy is a tool that must be wielded correctly in order to maximize its effectiveness and gain the most out it. Before you set anything in motion, it helps to know the requirements and potential pitfalls that may delay or derail your filing. Proper research and due diligence will go a long way in helping you climb out of your currently unfortunate financial status.

New You Credit Repair offers a variety of uniquely effective solutions to common financial problems. Once we review your financial situation, issues and goals, we will tell you which services we recommend for your specific situation, and where you should start. Call 866-403-0248 or go to for more information.

This article was published on 01 Jul 2014 and has been viewed 327 times
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