What is credit counseling and why do I have to do it?

Many people are confused when we tell them that before they file bankruptcy they have to go to credit counseling. The credit counseling requirement in bankruptcy law was enacted to help debtors reduce their chances of being in a position where they need to file bankruptcy again later in life.

Credit counseling comes into play twice during a Chapter 7 or Chapter 13 bankruptcy. First is within 180 days before you file for bankruptcy, and this is budget and credit counseling. Second is before a discharge is entered by the Court, and this is an instructional course on personal financial management.

You can’t just pick any credit counseling company to provide these courses. The bankruptcy administrator approves certain agencies to provide the credit counseling. If they are not on the bankruptcy administrators approved list, then it doesn’t count. Some companies are approved only for the first credit counseling and others are approved for both credit counseling sessions.

We have the list of approved credit counseling agencies and will provide that to you when you come to our office, but it is also available on the bankruptcy court’s website.