Chapter 13: Credit Counseling and Debtor Education Information
Bankruptcy laws require potential bankruptcy filers to be involved in courses that educate and inform about financial options.
Before you file for a Chapter 13 or Chapter 7 bankruptcy, you must receive credit counseling from an approved agency. Before bankruptcy is discharged, you must attain a personal finance management course known as debtor education.
Credit Counseling 101
The purpose of credit counseling is to help you evaluate your financial options and determine if you can repay debts through a repayment plan without filing bankruptcy.
In credit counseling, you will usually provide information regarding your income, expenses, and debts. The counselor then evaluates the information and proposes a repayment plan.
Debtor Education 101
Debtor education information is meant to instruct you to be responsible with your finances. The education is meant to help you learn from past mistakes and never be in the position to file bankruptcy again.
A debtor education course will usually provide tips in:
- Developing a budget
- Managing finances
- Using credit responsibly
- How to deal with financial emergencies
Information on Credit Counseling and Debtor Education
Below you will find in-depth information from the U.S. government on credit counseling and debtor education requirements for Chapter 13 bankruptcy filers. These requirements came about due to changes in bankruptcy laws that took effect in October of 2005.
In order to comply with the credit counseling and post-discharge debtor education requirements, filers must work with agencies that have been approved by the U.S. Trustee Program (a branch of the U.S. Department of Justice that is responsible for overseeing bankruptcy cases).
Below are links to information on credit counseling and debtor education, and two lists of agencies that have been approved by the Department of Justice:
- Credit Counseling and Debtor Education (DOJ)
- Approved Credit Counseling Agencies (DOJ)
- Approved Debtor Education Providers (DOJ)
- Choosing a Credit Counselor (FTC)
Rules For Counseling and Education
There are strict policies on credit counseling and debtor education requirements:
- The quality of counseling must be consistent whether the debtor takes the course online, in person, or over the phone. Also, the counseling must not be generic but individually specific to the debtor.
- Credit counseling agencies and debtor education providers must charge a reasonable fee of $50 or less. An individual’s income that falls 150% below the poverty line is eligible for a fee waiver.
- If you take the course over the phone or online, you will have to take a test before completing the course. An instructor must contact you if you can't score 70% or higher on the test.
Learn More About Chapter 13 Credit Counseling: Contact a Bankruptcy Attorney
The bankruptcy process involves making several critical decisions that will impact the amount of debt you retain, the property you can keep, and the impact on your ability to access credit later.
Before making important decisions, you should consult with an experienced professional. Find a local bankruptcy law attorney and get some peace of mind today.