A bankruptcy certificate is proof that you have successfully completed the bankruptcy requirements of debtor education and credit counseling. Before you may file, you must present a bankruptcy certificate proving you have successfully attended credit counseling. After declaring bankruptcy, you’ll need to sign up for a debtor education course and get a new bankruptcy certificate as identification.
The pre-bankruptcy credit counseling and pre-discharge education requirements that are necessary when you’re applying for bankruptcy protection are covered in this article. We’ll also go over where to look for businesses that can grant bankruptcy certifications for both credit counseling and the education requirement. We’ll discuss what qualities to seek for in a bankruptcy counselor in our final section.
Examples and Definition of a Bankruptcy Certificate
When you’re drowning in debt, bankruptcy is a legal process that can provide you a fresh start. But credit counseling is necessary before you can file for personal bankruptcy protection. Before a court can discharge, or exonerate you from accountability for, your debt, you must also successfully complete a debtor education course.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 requires both. The two primary forms of personal bankruptcy, Chapter 7 liquidation and Chapter 13 restructuring, have comparable requirements.
Counseling and the debtor education course cannot be finished at the same time. The debtor education course for a second certificate is planned after filing, whereas credit counseling occurs prior to filing.
The Function of Bankruptcy Certificates
Only organizations that have been given the U.S. Trustee Program’s approval may issue bankruptcy certificates, as well as debtor education programs. The only exception is if you reside in Alabama or North Carolina, as these states do not participate in the U.S. Trustee Program. You must locate a credit counseling agency and a debtor education course that have been approved by the bankruptcy administrator in your court district if you reside in Alabama or North Carolina.
Both petitioners may attend the counseling and education sessions if you’re pursuing a joint bankruptcy petition, but the service provider must give personalized services to each person. Both filers will be given individual bankruptcy certificates for debt management and credit counseling.
What Takes Place Throughout Credit Counseling?
Your counselor will assist you in assessing your financial condition and whether filing for bankruptcy makes sense for you when you consult with a credit counseling agency. Your precise financial status and the events that lead up to it must be covered by the service. They must also give you a financial management strategy that won’t put you in further debt.
You’ll get your certificate after finishing credit counseling, and it’s good for 180 days. If you decide to file for bankruptcy, the certificate will be part of your petition.
What takes place in the debtor education program?
You must finish the debtor education course after declaring bankruptcy. Budgeting, money management, and responsible credit usage will all be covered in the course. You will be given a bankruptcy certificate once everything is finished, which you must file with the bankruptcy court in order to have your obligations forgiven.
Although it is not necessary, your course provider may file the certificate with the court on your behalf. You will need to submit it with the court yourself if it doesn’t send it immediately to the court.
A bankruptcy will remain on your credit report for seven to ten years in accordance with Fair Credit Reporting Act regulations.
Bankruptcy Certificate Requirements
Typically, a credit counseling session lasts between 60 and 90 minutes. It can be finished online, over the phone, or in person. Credit counseling typically costs around $50.
You can take a debtor education course online, over the phone, or in person. It lasts around two hours. The price range is often $50 to $100.
All costs associated with the debt management program and credit counseling services must be made clear up front. You cannot be charged for a bankruptcy certificate unless you were informed of the cost in advance by either supplier.
Ask for a waiver if you are unable to pay the fee for either service. Usually, if your household income is less than 150% of the federal poverty limit, you’ll be eligible. If you are unable to pay, agencies must nonetheless deliver the service.
The Qualities of a Bankruptcy Counselor
The counseling appointment will likely be nothing more than a formality if you’ve already spoken with an attorney and are convinced you’ll file. However, if you’re assessing your options, find out if a potential counselor’s company also provides other services, including a debt management plan. Ask the counselors about their credentials and how they plan to protect your financial and personal information.
To get your bankruptcy certificate, you must locate a counseling service that has been authorized by the U.S. Trustee Program or your regional bankruptcy administrator. On the website of the U.S. Department of Justice, you may find a list of companies offering debtor education programs and credit counseling services that have been approved.
For completing credit counseling prior to filing for bankruptcy as well as a debtor education course after filing, you will obtain separate bankruptcy certificates. Both are required steps in the bankruptcy procedure.
Except if you reside in Alabama or North Carolina, only credit counseling organizations and debtor education programs that have been approved by the U.S. Trustee Program may issue bankruptcy certificates. If you reside in one of those states, speak with the bankruptcy administrator there to identify a service that has been approved.
Any additional costs for a bankruptcy certificate must be disclosed up front by credit counseling and debtor education groups.