What is Credit Counseling?

If you are planning to file for bankruptcy, be aware that the court will require you to successfully complete a credit counseling course. The goal of this course is to help you lay a foundation for the future use of credit and hopefully avoid circumstances that might lead to another bankruptcy. Here are some of the basics that you should know, including why complying with the court is so important.

Understanding the Essentials

The counseling courses approved by the court are designed to help you develop responsible habits as they relate to the use of credit. In order to accomplish this, the courses begin with the basics of what credit happens to be, the different forms of credit and how they are generally used. Once that foundation is laid, the coursework will move on to how individuals can learn to manage their credit successfully.

Is Credit Counseling the Same as Debtor Education?

You may hear the terms credit counseling and debtor education mentioned as you’re preparing the documents needed to file the petition. They do not refer to the same type of classes. In most jurisdictions, you will be required to complete the credit counseling course before filing the bankruptcy petition. After the petition is filed, you will need to make arrangements to take an approved debtor education course.

The debtor education course typically builds on the foundation laid by the credit counseling. The course will focus more on managing finances through budgeting, savings, and other means. Remember that you must satisfy the court’s education requirements before your case can be discharged.

Where Can I Get the Counseling?

Your lawyer has access to a listing of approved counseling services. That list is maintained by the bankruptcy court in your area. You are free to schedule the counseling with any service found on that list.

Many services offer multiple options for attending the classes. You may take the classes in a physical location. There’s also the possibility of taking the courses by phone. Just about all services today will also offer the courses online. The latter makes it easy to take the courses at a time that’s most convenient for you.

Once you’ve successfully completed the course, the service will provide you with a confirmation number. Some services will forward the confirmation to your lawyer. In some jurisdictions, you will need to forward the confirmation to your lawyer who will then supply it to the court.

Is it Possible to be Excused from Taking the Credit Counseling Course?

There are a few situations in which the court may choose to waive the requirement for the course. If you are disabled or are incapacitated under the Bankruptcy Code, your lawyer can request an exemption at the same time your petition is filed. People who are active duty military and currently serving in combat zones are also be eligible for an exemption.