When considering bankruptcy, one essential step is obtaining a Credit Counseling Certificate. This document proves that you have completed a pre-filing credit counseling session with a U.S. Trustee Program-approved agency, as required by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA).
The purpose of this requirement is to ensure individuals review their entire financial situation, explore alternatives to bankruptcy such as debt management plans or budgeting strategies, and make informed decisions.
Why You Need a Credit Counseling Certificate
Without this certificate, the bankruptcy court will dismiss your filing. The certificate must be obtained within 180 days before filing Chapter 7 or Chapter 13 bankruptcy. It demonstrates to the court that you have made efforts to resolve your debts and understand your financial options.
How to Obtain the Certificate
- Find an Approved Agency: Use the U.S. Department of Justice’s list of approved agencies to locate a certified credit counseling provider in your area.
- Complete the Counseling Session: This typically lasts 60 to 90 minutes and can be done online, by phone, or in person. The counselor will review your income, expenses, debts, and help you create a budget while discussing alternatives to bankruptcy.
- Receive Your Certificate: After completing the session, you receive the certificate necessary to file your bankruptcy petition. This certificate is only valid for 180 days.
The cost usually ranges from $20 to $50, with waivers available for those whose income is under 150% of the federal poverty level.
Credit Counseling Certificate vs. Debtor Education Certificate
It’s important not to confuse the pre-filing Credit Counseling Certificate with the post-filing Debtor Education Certificate. The latter must be completed after filing but before debt discharge and focuses on future financial management.
| Certificate Type | Credit Counseling Certificate | Debtor Education Certificate |
|---|---|---|
| When Taken | Before filing for bankruptcy | After filing, before debts are discharged |
| Purpose | Assess financial situation and alternatives | Learn budgeting and credit management post-bankruptcy |
| Requirements | Mandatory to start bankruptcy process | Mandatory to complete bankruptcy process |
Additional Resources
For more details on bankruptcy procedures, see our guide on Bankruptcy Dismissal.
FAQs
- What if I file without the certificate? Your case will likely be dismissed, requiring you to retake the counseling and refile.
- Must I follow the counselor’s advice? No, you only need to complete the session.
- Do both spouses need separate certificates? Yes, in joint filings, each spouse must complete the course, though one session may suffice.
For official information, visit the U.S. Department of Justice’s bankruptcy counseling page.
