Bankruptcy Abuse Prevention and Consumer Protection Act of
2005 Requires Credit Counseling Before Filing Chapter 7!
A change to the bankruptcy law, effective October 17, 2005,
requires credit counseling from a government approved organization sometime
within the six month period before you can file for chapter 7 bankruptcy
protection. The website of the U.S. Trustee Program, the organization within
the U.S. Department of Justice that administers bankruptcy cases, provides a
list of government-approved credit counseling organizations listed
state-by-state. Before filing chapter 7 bankruptcy,
use this link to find an
Approved Credit Counseling Agency.
IMPORTANT NOTES:
1. As a result of Hurricane
Katrina, the U.S. Trustee Program has temporarily waived the credit counseling
requirement for consumers who are filing for bankruptcy in Louisiana and the
Southern District of Mississippi.
2. The credit counseling requirement
does not apply to debtors who are incapacitated, disabled or on active duty in
a military zone. For more information, visit
United States Trustee
Program
Credit Counseling Requirements:
The new
bankruptcy law requires credit counseling before filing for bankruptcy and this
counseling can take place in person, on the phone, or online.
Counseling sessions include an analysis of your budget and can last over an
hour. Although the credit counseling organization can charge a reasonable fee
for its services, any organization on the U.S. Trustee’s list must
waive the fee for anyone who can't afford to pay. Once you have
completed the required counseling, you must obtain a certificate as
proof AND it must be the appropriate certificate for the bankruptcy
court where you will be filing for bankruptcy. Some credit counseling
organizations may charge extra for the certificate.
WARNING! Debt Management Plans (DMP) are NOT
required for consumers who are filing for bankruptcy. However, if
you choose to use a DMP, then you'll need to provide the bankruptcy court with
a copy of your plan when your file for chapter 7 bankruptcy.
Choosing a Credit Counselor:
Call several credit counseling
agencies to ask the questions below BEFORE making a final decision on which
agency to go with. (All questions come from the
FTC Website
- What services do you offer?
- Will you help me develop a plan for avoiding problems in the
future?
- What are your fees?
- What if I can't afford to pay your fees?
- What are the qualifications of your counselors?
- Are they accredited or certified by an outside
organization?
- What training do they receive?
- What do you do to keep information about me (including my
address, phone number, and financial information) confidential and secure?
- How are your employees paid?
- Are they paid more if I sign up for certain services, if I pay
a fee, or make a contribution to your organization?
- Suppose I want only the credit counseling services and budget
analysis that are required before I can file for bankruptcy relief. How much
will these services cost?
- What services will your company provide?
- How will I know that I have the correct certificate I need to
file for bankruptcy?
- Does the certificate cost extra? If so, how much?
Bankruptcy Forms B22A is an official bankruptcy form called
"Statement of Current Monthly Income and Calculations" and is the form most
chapter 7 debtors will complete for “means testing” purposes
beginning October 17, 2005. Bankruptcy Form B22A
If you've fallen behind on your
bills, especially credit cards, don't panic. You may have several good options
available to you. Your success starts by assessing your current situation and
finding a trusted service provider that is licensed in your state.
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