In 2005, the Bankruptcy Abuse Protection and Consumer Protection Act (BAPCPA) drastically changed the way that bankruptcy proceedings occur in the United States. According to the Department of Justice's U.S. Trustee Program website, one of the most significant changes in this act includes a requirement of certifying entities to provide credit counseling to people who file for Chapter 7 and Chapter 13 bankruptcy.
Under the BAPCPA's new regulations, consumers who wish to file for bankruptcy must attend credit counseling education within the six months prior to their filing date. The U.S. Trustee website provides an approved list of credit counseling centers nationwide so that you can select a nonprofit center near you. The agency you select must be on this list in order to satisfy the credit counseling requirement set forth by BAPCPA.
What is Credit Counseling?
Credit counseling is an educational meeting that can be completed in person, via the telephone and even on the Internet. During your credit counseling session, a qualified counselor will evaluate your personal finances (and those of your spouse, if filing jointly), discuss possible alternatives to bankruptcy and help you create a personal budget and debt reduction plan. Upon completion, you'll receive a certificate of proof that must be included at the time of bankruptcy filing.
After you file for bankruptcy, federal law also requires that you complete additional financial education/certification before your debts will be permanently discharged. It is important to note that your bankruptcy case can be thrown out without proper credit counseling certification. If you are unclear on the process of credit counseling or simply need help filing for Chapter 7 or Chapter 13, a bankruptcy lawyer in Modesto can help you get on the right track to put your mind at ease and get you on the road to recovery.
