New Bankruptcy Law

A change to the bankruptcy law, effective October 17, 2005, requires credit counseling from a government-approved organization sometime within the six months before you can file for chapter 13 bankruptcy protection. The website of the U.S. Trustee Program, the organization within the U.S. Department of Justice that administers bankruptcy cases, provides a state-by-state list of government-approved credit counseling organizations. Use this link to find an Approved Credit Counseling Agency before filing Chapter 7 bankruptcy.

Credit Counseling Requirements: 

The new bankruptcy law requires credit counseling before filing for bankruptcy and this counseling can take place in person, on the phone, or online. Counseling sessions include an analysis of your budget and can last over an hour. Although the credit counseling organization can charge a reasonable fee for its services, any organization on the U.S. Trustee’s list must waive the fee for anyone who can’t afford to pay. Once you have completed the required counseling, you must obtain a certificate as proof AND it must be the appropriate certificate for the bankruptcy court where you will be filing for bankruptcy. Some credit counseling organizations may charge extra for the certificate.

WARNING! You are not required to have a Debt Management Plan (DMP) to file bankruptcy. However, if you choose to use a DMP, then you’ll need to provide the bankruptcy court with a copy of your plan when you file for chapter 13 bankruptcy.

Choosing a Credit Counselor:

Call several credit counseling agencies to ask the questions below BEFORE making a final decision on which agency to go with. (All questions come from the FTC Website)

  • What services do you offer?
  • Will you help me develop a plan for avoiding problems in the future?
  • What are your fees?
  • What if I can’t afford to pay your fees?
  • What are the qualifications of your counselors?
  • Are they accredited or certified by an outside organization?
  • What training do they receive?
  • What do you do to keep information about me (including my address, phone number, and financial information) confidential and secure?
  • How are your employees paid?
  • Are they paid more if I sign up for certain services, if I pay a fee, or make a contribution to your organization?
  • Suppose I want only the credit counseling services and budget analysis that are required before I can file for bankruptcy relief. How much will these services cost?
  • What services will your company provide?
  • How will I know that I have the correct certificate I need to file for bankruptcy?
  • Does the certificate cost extra? If so, how much?

Bankruptcy Forms B22c is an official bankruptcy form called “Statement of Current Monthly Income and Calculations” and is the form most chapter 13 debtors will complete for “means testing” purposes beginning October 17, 2005. Bankruptcy B22c