Before choosing bankruptcy (Chapter 13 or Chapter 7) you need to know that the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 requires all debtors to receive credit counseling before they will be allowed to file bankruptcy. This counseling was made mandatory to ensure that people understood their options before declaring bankruptcy.

Non-profit credit counseling services must be approved by the U.S. Department of Justice’s Trustee Program, except in Alabama and North Carolina where court officials (specifically Bankruptcy Administrators) approve pre-bankruptcy credit counseling services.

The pre-bankruptcy session will include an assessment of your current personal financial situation, a discussion of alternatives to bankruptcy, and a personal budget plan. A certified credit counselor will help you look at all your options. He or she is required to offer impartial advice, meaning that he or she cannot force you to make a specific financial decision.

Once you have completed the required counseling, you must obtain a certificate as proof. You must bring the counseling completion certificate with you to court. Note that your pre-bankruptcy credit counseling session must be completed within the 180 days prior to your bankruptcy filing. If you go to bankruptcy court to file bankruptcy, and you have not completed your credit counseling, you will not be permitted proceed.

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