Pre-Bankruptcy Counseling

One of the more notable changes to the 2005 bankruptcy laws requires that anyone filing for bankruptcy complete a credit counseling course. This course is designed to provide valuable information about debt management, budgeting and using credit wisely. If you are entering credit counseling for the first time, be sure to review a few important details first.

Key Points

There are many companies operating as credit counseling agencies, but not all are licensed to provide the services required by the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act. Bankruptcy consumers are required to obtain their credit counseling from an agency that is approved by the U.S. Department of Trustees.

In general, an approved agency will contain a few notable characteristics. First, the company will operate as a nonprofit organization, meaning they hold an official Section 501(c)(3) status under the IRS code. This status can be verified by reviewing the list of charitable organizations on the IRS’ website. Second, the company should be accredited by the National Foundation for Credit Counseling and the Better Business Bureau. This information can be found at the NFCC’s and BBB’s websites. Last, the company should only employee credentialed employees, meaning the staff should consist of Certified Financial Planners, lawyers, Certified Public Accountants or other financial experts. Ensuring the agency you choose meets these conditions is the best way to be sure you are receiving the high quality information required by the process.