Credit Counseling
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Before any debtor files a petition for Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, every debtor, including those with primarily business debts, must take a Credit Counseling course from an approved credit counseling agency.  Credit Counseling takes about 2 hours and can be done over the phone or on the internet. There is a fee for the credit counseling course that varies by agency.  Credit counseling must be completed within 6 months (180 days) before you file for bankruptcy and you must file a Certificate of Counseling within 14 days after filing your petition.

Credit Counseling is intended to give you information about debt relief, debt management, debt repayment options and is intended to help you decide whether you have the ability to pay your debt without filing Chapter 7 Bankruptcy or Chapter 13 Bankruptcy.  As part of the counseling session, a counseling agency helps you to prepare and understand a budget based on your income and expenses.  They will discuss your options for repaying the debt. In many cases, they will advise you that bankruptcy is your only realistic option.

It is very important that you DO NOT file for bankruptcy before you take a credit counseling course and receive a Certificate of Counseling.  If you do file your petition before you take the course and receive the credit counseling certificate, your case WILL BE DISMISSED  (No exemptions).  You cannot reinstate your case or reopen it  You will have to file a new bankruptcy case and pay another filing fee. Also, you may not lose important protections provided by the automatic stay in your second case.  This means that if you file bankruptcy to stop a foreclosure, or to stop a repossession, and have not taken the credit counseling course before you file, you may still lose your home or your vehicle.

To assist individuals in finding a credit counseling agency, the USTP maintains a list of approved agencies on its website:  https://www.justice.gov/ust/list-credit-counseling-agencies-approved-pursuant-11-usc-111

If a debtor is unable to attend a credit counseling course (such as an incarcerated or hospitalized client) a person with the debtor’s lawful power of attorney may complete credit counseling on behalf of that debtor, if the power of attorney is valid under state law and grants the representative the authority under state law to file a bankruptcy petition. The credit counseling certificate must list both the name of the debtor and the name of the representative along with that representative’s legal capacity (e.g. John Doe, as Attorney-In-Fact for Jane Doe).  Alternatively, the debtor’s attorney may file a motion with the Court requesting an order excusing the debtor from the Credit Counseling requirement.

If you cannot afford to pay for credit counseling each counseling agency is required to inform clients whether the services are available for free or at a reduced rate, based on a client’s ability to pay, before providing any information to or obtaining any information from a client, and before beginning a counseling session.  Fee waiver policies may vary by agency. At a minimum, however, a client whose household income is less than 150 percent of the poverty level is presumptively entitled to a fee waiver or fee reduction.  The poverty level is defined by the poverty guidelines updated periodically in the Federal Register by the U.S. Department of Health and Human Services under the authority of 42 U.S.C. § 9902(2).   For the 2018 poverty guidelines see the following link:  Search Federal Register for Annual Poverty Guideline Updates

If you are facing difficult financial troubles, if you are unable to pay your debts, are facing foreclosure or the repossession of your car, contact Bredow Law PLC, immediately for a free telephone consultation.  We can help you understand your options and get you on the way to your own Fresh Start.  Follow this link: Contact Us to contact Bredow Law PLC or if you prefer, call us at (248) 795-5516 or email us at info@bredowlaw.com