Is credit counseling part of a Chapter 7 bankruptcy filing?

Yes, the chapter 7 process includes credit counseling. Actually, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 require individuals to obtain credit counseling from a government-approved credit counseling organization, according to the U.S. Federal Trade Commission (FTC). The first credit counseling session called the pre-bankruptcy credit counseling must be taken within 180 days before filing chapter 7 bankruptcy petitions. During the credit counseling session, a credit counselor review people’s finances and suggest any alternatives to bankruptcy such as budget planning. The session lasts approximately 90 minutes and costs about $50 (depending on where people live).

Individuals must complete a credit counseling session before chapter 7 cases are discharged. The post-filing debtor education course requires individuals to learn better debt management skills. For instance, individuals learn how to develop a personal budget and use credit cards less. The course lasts for about two hours. Also, the cost of post-filing debtor education course depends on where people live, but typically ranges from $50 to $100.

Individuals can complete, the pre-bankruptcy credit counseling session and post-filing debtor education course either online, in person or via the telephone. After the credit counseling people must receive a certificate of proof from the credit counselor. The certificates must be submitted to the U.S. Bankruptcy Courts.

The chapter 7 process is complex with many different rules and requirements for completing the credit counseling. For example, the credit counseling must be taken the jurisdiction people are planning to file. Thus, consult a bankruptcy lawyer.