Skip to Content

Credit Counseling and Debtor Education in Bankruptcy - Part 7 of 12


A 12-part Series On All You Need To Know About The Process of Filing for Chapter 7 Bankruptcy

Part Seven – Credit Counseling and Debtor Education in Bankruptcy

I had a law professor tell me in law school many years ago that bankruptcy is the “great economic safety valve.” It is designed to give folks a fresh start. Obviously, it is to the benefit of society and the individual filing bankruptcy that they learn from the experience and not have to file bankruptcy again. In fact, a person must wait eight years to file a second Chapter 7 bankruptcy. So, as part of filing for bankruptcy the filing debtor will have to take one pre-filing credit counseling course and a post-filing debtor education course.

First, the pre-filing credit counseling requirement is that individual debtors must undergo pre-filing credit counseling during the 180-day period ending on the petition date. The counseling must be from a nonprofit credit counseling agency approved by the U.S. Trustee but need not be in person. The purpose, of course, is to determine whether the debtor's financial problems can be solved by an out-of-bankruptcy payment plan.

In addition to pre-filing counseling, individual debtors filing Chapter 7 bankruptcy cannot obtain a discharge unless, after filing, they complete a personal financial management course from an agency approved by the U.S. Trustee. The instruction may be by telephone or over the internet. The Office of the U.S. Trustee has compiled a list of approved providers of personal financial management instructional courses for all judicial districts.

Failure to finish and file proof of completion of both pre-filing credit counseling and post-filing debtor education can result in a dismissal of the bankruptcy for non-compliance.

Share To: