What to Know About Credit Counseling and Bankruptcy

 Posted on November 18, 2024 in Bankruptcy

If you are filing for bankruptcy protection, bankruptcy law requires that you complete credit counseling within six months prior to filing bankruptcy. In order to proceed with the bankruptcy process you will have to submit a certificate of completion of credit counseling to the court, regardless of whether you plan to file for Chapter 7 or Chapter 13 protection. 

Credit counseling is required to ensure that there are not better options to filing for bankruptcy, since other debt-management alternatives are available, and also to help prevent situations that necessitate bankruptcy in the future. Done correctly, credit counseling is one of the benefits of applying for bankruptcy protection. Speak to an experienced Houston, TX bankruptcy attorney to understand the details of the credit counseling process.

How Does Pre-Bankruptcy Credit Counseling Work?

During credit counseling, you will work together with a counselor to come up with an estimated budget based on your income. Taking this information into consideration, the counselor will determine whether bankruptcy is the right option in your case, or whether there are alternatives that might better serve your situation. Credit counseling sessions usually take around one hour to 90 minutes. During that time the credit counselor will:

• Review your financial circumstances

• Explain your options in bankruptcy and whether any alternatives may suit you better

• Review the next steps should you file for bankruptcy

Once you complete the counseling, you will receive a certificate that states that you meet the requirements to file for bankruptcy, which is valid for 180 days. That is the time period you will have to file bankruptcy. After the bankruptcy proceeding, you will also have to complete a debtor education course in order for your debts to be discharged.

How Does Credit Counseling Benefit You?

Although bankruptcy is an effective way to discharge your debts, it is also a difficult process that can have many challenging effects on your financial life. Credit counseling can help you figure out if indeed bankruptcy is the right option for you, or if there are other solutions better suited to your situation.

The estimated budget and personalized plan that credit counseling provides can help you begin the process of getting your financial life sorted out, but there is no requirement that you use them.

How to Find a Credit Counselor

The government provides a list of its approved credit counselors. Although credit counseling is provided by a non-profit organization, there usually is a fee for the counseling. If you cannot afford the fee, you may be able to obtain a waiver. To find the right credit counselor, first locate your judicial district and then check the list of approved credit counseling providers.

Contact a Waller County, TX Credit Counseling Attorney

If you are considering filing for bankruptcy, experienced Harris County, TX bankruptcy attorney Vicky Fealy can advise you on what to expect from the bankruptcy proceeding, including the credit counseling requirement. At The Fealy Law Firm, PC the firm strives to assist individuals going through hard financial times. Contact us at 713-526-5220 for a complimentary consultation.