Filing for Bankruptcy: What to Know

If you plan to file for bankruptcy protection, you must get credit counseling from a government-approved organization within 180 days before you file. You also have to complete a debtor education course before your debts can be discharged.

Approved Credit Counselors and Debtor Educators

The Department of Justice's U.S. Trustee Program approves organizations to provide the credit counseling and debtor education required for anyone filing for personal bankruptcy. Only the counselors and educators who appear on the U.S. Trustee Program's lists can advertise that they are approved to provide the required counseling and debtor education. By law, the U.S. Trustee Program does not operate in Alabama and North Carolina; in these states, court officials called bankruptcy administrators approve pre-bankruptcy credit counseling organizations and predischarge debtor education course providers.

Counseling and Education Requirements

Pre-bankruptcy credit counseling and predischarge debtor education may not be provided at the same time. Credit counseling must take place before you file for bankruptcy; debtor education must take place after you file.

You must file a certificate of credit counseling completion when you file for bankruptcy, and evidence of completion of debtor education after you file for bankruptcy — but before your debts are discharged. Only credit counseling organizations and debtor education course providers that have been approved by the U.S. Trustee Program may issue these certificates. To protect against fraud, the certificates are numbered and are produced through a central automated system.

Pre-bankruptcy Counseling

A pre-bankruptcy counseling session with an approved credit counseling organization should include an evaluation of your personal financial situation, a discussion of alternatives to bankruptcy and a personal budget plan. A typical counseling session should last about 60 to 90 minutes and can take place in person, on the phone or online. The counseling organization is required to provide the counseling for free for people who can't afford to pay. If you can't afford to pay a fee for credit counseling, ask for a fee waiver from the counseling organization before the session begins. Otherwise, you may be charged a fee for the counseling. It will generally be about $50, depending on where you live and the types of services you receive, among other factors. The counseling organization must discuss any fees with you before you start the counseling session.

Once you complete the required counseling, you must get a certificate as proof. Check the U.S. Trustee's website to be sure that you receive the certificate from a counseling organization that is approved in the judicial district where you are filing bankruptcy. Credit counseling organizations may not charge an extra fee for the certificate.

Post-filing Debtor Education

A debtor education course by an approved provider should include information on developing a budget, managing money and using credit wisely. Like prefiling counseling, debtor education can take place in person, on the phone or online. The education session might last longer than the prefiling counseling — about two hours — and the fee is between $50 and $100. As with prefiling counseling, if you can't afford the session fee, ask the debtor education provider to waive it. Check the list of approved debtor education providers online (or at the bankruptcy clerk's office in your district): https://www.justice.gov/ust/list-approved-providers-personal-financial-management-instructional-courses-debtor-education.

Once you have completed the required debtor education course, you should receive a certificate as proof. This certificate is separate from the certificate you received after completing your prefiling credit counseling. Check the U.S. Trustee's website to be sure that you receive the certificate from a debtor education provider that is approved in the judicial district where you filed for bankruptcy. Unless the debtor education provider told you there would be a fee for the certificate before the education session began, you can't be charged an extra fee for it.

Choosing a Credit Counselor

If you're looking for credit counseling to fulfill the bankruptcy law requirements, make sure you receive services only from approved providers for your judicial district. Check the list of approved credit counseling providers online (or at the bankruptcy clerk's office for the district where you will file): https://www.justice.gov/ust/list-credit-counseling-agencies-approved-pursuant-11-usc-111. Once you have the list of approved organizations, call several to gather information before you pick one. These are some key questions to ask:

• What services do you offer?
• Will you help me develop a plan for avoiding problems in the future?
• What are your fees?
• What if I can't afford your fees?
• What qualifications do your counselors have? Are they accredited or certified by an outside organization? What training do they receive?
• How do you keep information about me (including my address, phone number and financial information) confidential and secure?
• How are your employees paid? Are they paid more if I sign up for certain services, if I pay a fee or if I make a contribution to your organization?

Help and Information

The U.S. Trustee Program promotes integrity and efficiency in the nation's bankruptcy system by enforcing bankruptcy laws and overseeing private trustees. The program has 21 regions and 95 field offices, and oversees the administration of bankruptcy in all states except Alabama and North Carolina. For more information, visit the U.S. Trustee Program website: https://www.justice.gov/ust.

If you have concerns about approved credit counseling agencies or debtor education course providers, contact the U.S. Trustee Program by email at USTCCDEComplaintHelp@usdoj.gov, or send a letter to Executive Office for U.S. Trustees, Credit Counseling and Debtor Education Unit, 20 Massachusetts Ave. NW, Suite 8000, Washington, DC 20530. Include as much detail as you can, including the name of the credit counseling organization or debtor education course provider, the date of contact and whom you talked to.