Filing for bankruptcy is a serious decision. The government wants to make sure every person considering this action is fully aware of the consequences and the alternatives. Since the bankruptcy laws were changed in 2005, it is now mandatory that anyone who intends to file Chapter 7 or Chapter 13 bankruptcy receives credit counseling sometime during the 6 months prior to filing. This is not just Minnesota bankruptcy law, but is mandated by the federal government.
In order for your counseling to meet the court’s qualifications, you must use a credit counseling organization that has been approved by the U.S. Trustee Program or, in some states, the Bankruptcy Administrators.
So what does this process include? Is there a fee for this service? Here are the answers to some of the most frequently asked question about pre-bankruptcy credit counseling.
What to Expect During the Counseling Process
The credit counseling procedure normally includes 3 steps:
- an assessment of your personal financial situation
- a dialogue about bankruptcy alternatives and their pros and cons
- help making a personal budget plan
Most counseling sessions take place on the internet, but counseling sessions are also available via the telephone or face to face. The session usually takes between 1 and 2 hours.
How Much Does Pre-Bankruptcy Credit Counseling Cost?
The fee charged by a credit counseling organization is usually about $50. This fee can vary in different regions or if you choose to request additional services. Your ability to pay is also considered.
If you do not have the money to pay for the counseling service, you are required to request a fee waiver before you begin counseling. Credit counseling organizations must provide the counseling free of charge to people who cannot afford to pay for it.
How to Prove You Received the Required Credit Counseling
It is mandatory that the counseling organization issues you a certificate of completion. It must be issued within 24 hours of finishing the counseling session and they cannot charge you any more for the certificate. The certificate is valid for 180 days after it is issued. You must be able to produce this certificate when you file for bankruptcy.
If you have questions about the mandatory pre-bankruptcy credit counseling process or other questions about Minnesota bankruptcy law, be sure to ask your Minnesota bankruptcy attorney.
