What is the “Credit Counseling” Requirement to File Bankruptcy?

A credit counseling course must be completed before an individual can file bankruptcy. This course basically goes through your budget and educates on how to prioritize certain expenses, save money and manage a household budget.

While every individual who files for Chapter 7, Chapter 13 or even Chapter 11 bankruptcy is required to complete this credit counseling course before filing bankruptcy, this class is relatively simple and some even find it useful.

What you should know about the credit counseling course:

1. You can take the course online, over the phone or in person.

2. The course usually costs around $25 if you take it online or over the phone.

3. Once completed, you will be issued a Certificate of Credit Counseling, which you must provide to your bankruptcy attorney for filing with the court.

4. Have your attorney’s email address handy when you take the course so the agency can forward the certificate directly to your bankruptcy attorney.

5. A Certificate of Credit Counseling is only valid for 180 days. If you do not plan to file for bankruptcy for another six months or more, you may wish to hold off on taking the class until closer to the file date.

6. It must be taken from an approved credit counseling agency in Minnesota (for Minnesota bankruptcy filers).

7. You will also have to take a second course after you file bankruptcy but before you get a discharge. This second course is called “Debtor Education” or “Financial Management” and the process is similar to taking the first course. This second certificate must be filed with the bankruptcy court before you can receive a bankruptcy discharge. You do not have to take the second course from the same agency that you took the Credit Counseling.

A list of the approved Credit Counseling and Debtor Education agencies can be found on the US Department of Justice website at www.justice.gov/ust/eo/bapcpa/ccde/index.htm.

Lynn Wartchow represents clients in Chapter 7 and Chapter 13 in Minneapolis, Edina and Twin Cities Minnesota consumer bankruptcy proceedings. Consultations are free.

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