The Bankruptcy Credit Counseling Course: An Annoying But Necessary Requirement
The Bankruptcy Credit Counseling Course Requirement: Required Before & After Filing a Chapter 7 or Chapter 13 Bankruptcy Petition
The pre-filing and post-filing credit counseling course requirement is one of the "innovations" of the 2005 BAPCPA "bankruptcy reform" legislation that Congress enacted. The requirement provides that, in order to file a Chapter 7 or Chapter 13 bankruptcy, you must have taken a pre-filing "credit counseling" course and file with your bankruptcy petition a certificate of completion of the pre-filing course. Even if you are filing an "emergency" petition in order to use the Bankruptcy Automatic Stay to stop a lawsuit, foreclosure, garnishment, or other dire collection mechanism, you must still take the time before filing to complete the pre-filing course. After filing, you must take another course, the "debtor education" or "pre-discharge" course. The pre-filing credit counseling course and the pre-discharge debtor education course are provided by "certified" credit counseling companies, who have received a sort of license from the Office of the US Trustee, a division of the US Department of Justice, to provide the courses for a small fee. The pre-filing credit counseling course can run you anywhere from $10-$50, depending upon which credit counseling course provider your Michigan bankruptcy attorney recommends, and the post-filing, pre-discharge debtor education course usually costs a notch less. Each credit counseling course may be taken online or by telephone, and neither requires that you actually sit in a classroom. The classes purport to educate you as to some basics of financial management and/or to teach you some basic budgeting techniques. The requirement stems from an unfortunate preconception by ill-educated members of the US Congress, who implemented the requirement in 2005, that people who file for bankruptcy just don't know how to handle money properly and that, if only they received some automatic, pat "advice" from a "certified" credit counselor, they perhaps could avoid filing for bankruptcy. Never mind that most bankruptcies are filed because of an outside circumstance beyond the specific control of the individual seeking relief through the filing of a Chapter 7 or Chapter 13 bankruptcy petition, such as job-loss, divorce, medical issues, and other such circumstances. The vast majority of bankruptcies filed in the United States have nothing whatsoever to do with an inability to manage money. In other words, the bankruptcy credit counseling course requirement is a condescending requirement. Worse, however, the credit counseling course is so vacant of actual useful information that it actually serves no purpose whatsoever. It will teach you nothing in all likelihood; the information you input into the web-interface of the private company providing you the credit counseling course will not end up in your bankruptcy petition. The dubious "result" of the course often comes very close, in the opinion of Southfield-area bankruptcy lawyer John Hilla, to providing legal advice without a license to practice law. A few course providers have been criticized for suggesting to credit counseling course participants that, because they hold some debt, they may suffer from a psychological issue. (The Hilla Law Firm, PLLC does not send its clients to this course provider!) What these classes actually do is simple, however: they cost you a little more money, and they comprise one more hoop to jump through on your way to achieving a legal discharge of your debts through bankruptcy. They will waste a little of your time and, most likely, tell you nothing about money management that you didn't already know. But, until Congress changes the law, a requirement is a requirement, and you should plan on the credit counseling course completion certificate being one more piece of documentation you will have to provide to your bankruptcy attorney prior to filing and the cost of the course being one more small price to pay for the ultimate benefit of permanently discharging many thousands of dollars' worth of debt. If you are a Michigan resident and are considering filing for bankruptcy, please contact us at (866) 674-2317 or click the button below to schedule a free, initial consultation.