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Pre-Bankruptcy Counseling Requirements

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Filing for bankruptcy is a serious decision. While bankruptcy can be a great solution for people facing crushing debt, it comes with long-term consequences. For these reasons, the federal government requires every individual filing for bankruptcy to complete a credit counseling course prior to filing for bankruptcy. Learn more about these courses below.

Pre-Filing Credit Counseling

Within 180 days of filing for bankruptcy, you must complete a pre-filing credit counseling session. This session must be conducted by a credit counseling agency approved by the Bankruptcy Administrator for the state of Alabama. The purpose of credit counseling is to help you determine whether you might be capable of getting out of debt without filing for bankruptcy. The session will last between 60 and 90 minutes. During this time, the counselor will try to create a budget based on how much you make and how much debt you hold, and will go over possible debt repayment options with you. Most of the time, the credit counselor concludes that you will need to go through bankruptcy because your income is too low to repay your debts. Credit counseling may be done by telephone or online.

After completing credit counseling, you must file the certificate received from the credit counseling agency within 15 days of completion of the course along with a copy of any payment plan which the counseling agency may have created. The court will review the payment plan to determine whether or not the plan seems feasible. In the unlikely event that the court agrees with the repayment plan, the court may try to have you file under Chapter 13 instead of Chapter 7. That said, if you’ve qualified under the bankruptcy means test to file under Chapter 7, this is unlikely.

Which counselor to choose

The Alabama Bankruptcy Administrators publishes a list of approved credit counselors, broken down by region of the state. You can find that list here. The credit counseling session typically costs $50, but fee waivers or reduced fees are easily available for low-income individuals. Your bankruptcy attorney may have suggestions as to which credit counselor to select.

If you are facing an increasing amount of debt and need help in finding a way forward, contact the seasoned and knowledgeable Montgomery bankruptcy attorneys at the Dansby Law Firm for a consultation, at 334-834-7001.

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