Prior to filing for bankruptcy, you must complete the credit counseling requirement and obtain proof in the form of a certificate, which your attorney will file with the Court on your behalf. The requirement was created as part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) and is designed to protect both creditors and debtors. The purpose of this act was to stop consumers from racking up high bills and escaping payment by simply filing for bankruptcy. It was also created to protect debtors who have fallen victim to multiple credit card offers. Additionally, the Act was put in place to help to educate people who formed credit addictions or mismanaged their money.
The credit counseling requirement makes it impossible for a person to apply for bankruptcy without gaining an education on managing bills. But it is not the typical type of classroom education that you might expect. You do not have to go to classes or take any quizzes or tests. You just have to spend about an hour reading some information and tips on managing your finances, and create and review a budget, all in the hopes that this one hour process will help you gain some more insight into better managing your finances and credit habits in the future.
You take your bankruptcy credit counseling class with an organization that has been preapproved by the United States Department of Justice, United States Trustee Program. The program has a list of certified approved organizations that can conduct this counseling and issue the debtor proof of completion. To learn how to do credit counseling before filing for bankruptcy or to find a list of the government approved credit counseling class providers, visit our bankruptcy credit counseling page.
Once you complete the credit counseling course, you will receive a certificate of completion that you must provide to your San Diego bankruptcy attorney, who will file the certificate with the Court at the time that you file your case. Keep in mind that you will be completing two courses: one before you file; and one after you file. The second course takes about twice as long as the first course and is called a debtor education course. The goal of both courses is to get you thinking about managing your finances better and gaining knowledge to start practicing smart spending habits after you get your fresh start.