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Pre-Bankruptcy Credit Counseling Course

    Credit Counseling Requirement

    A bankruptcy credit counseling course is a requirement before you file for bankruptcy.  This must be accomplished from an approved credit counseling agency within 180 days before your bankruptcy is filed.  The agency will review possible options available to you in credit counseling and assist you in reviewing your budget.  Different agencies provide the counseling in-person, by telephone, or over the Internet.  If you decide to file bankruptcy, you must have a certificate from the agency showing that you received the counseling before filing your case.

    Cost of Credit Counseling Course

    Most approved agencies charge between $15-$35 for the pre-filing counseling.  However, the law requires approved agencies to provide bankruptcy counseling and the necessary certificates without considering an individual’s ability to pay.  If you cannot afford the fee, you should ask the agency to provide the counseling free of charge or at a reduced fee.

    Credit Counseling Agencies

    If you decide to go ahead with bankruptcy, you should be very careful in choosing an agency for the required counseling.  It is extremely difficult to sort out the good counseling agencies from the bad ones.  Many agencies are legitimate, but many are simply rip-offs.  And being an “approved” agency for bankruptcy counseling is no guarantee that the agency is good.  It is also important to understand that even good agencies won’t be able to help you much if you’re already too deep in financial trouble.

    Debt Management Plans

    Some of the approved agencies offer debt management plans.  This is a plan to repay some or all of your debts.  Here, you send the counseling agency a monthly payment that it then distributes to your creditors.  Debt management plans can be helpful for some consumers.  For others, they are a terrible idea.  The problem is that many counseling agencies will pressure you into a debt management plan as a way of avoiding bankruptcy whether it makes sense for you or not.  It is important to keep in mind these important points:

    Bankruptcy is not necessarily to be avoided at all costs.  In many cases, bankruptcy may actually be the best choice for you.

    If you sign up for a debt management plan that you can’t afford, you may end up in bankruptcy anyways.

    There are approved agencies for bankruptcy counseling that do not offer debt management plans.

    It is usually a good idea for you to meet with an attorney before you receive the required credit counseling.  Unlike a credit counselor, who cannot give legal advice, an attorney can provide counseling on whether bankruptcy is the best option.  If bankruptcy is not the right answer for you, a good attorney will offer a range of other options.  The attorney can also provide you with a list of approved credit counseling agencies.