Bankruptcy Credit counseling: What is it and why do you need to do it?
I first started practicing bankruptcy law in Michigan
in the early 1990’s. Back then it was easier and less expensive to file a bankruptcy case for my typical client. The only drawback was that you couldn’t file the case electronically, you actually had to go down to the bankruptcy court and physically file the case by handing them your client’s original bankruptcy petition which averaged about 50 pages along with five copies (one copy for the judge’s file, one for the trustee, one for the intake office, one for my file, and a copy for my client. Each bankruptcy case used more than ½ a ream of paper! Things changed in 2005 when electronic filing became available in the Detroit Bankruptcy
Court in which I practice. You could literally file a bankruptcy case 24/7 and 365 days a year from any place with an internet connection.
Before filing bankruptcy in Michigan or anywhere in the US, you must get a pre-bankruptcy credit counseling certificate.
When did bankruptcy credit counseling become a requirement?
2005 was also the year in which the United States Bankruptcy code was overhauled. Known as the Bankruptcy Abuse Prevention and Consumer Protection Act or BAPCPA for short, it was the most comprehensive overhaul to the federal bankruptcy laws in many years. One of the most dramatic changes was the requirement that before a person or married couple can file a bankruptcy case they must first complete a credit counseling briefing with a service approved by the United States Trustee’s office
and get a certificate that they did so. My office cannot file the bankruptcy case without attaching the certificate to the actual filing. Completing the pre-filing briefing session is easy. It can be done via a phone call or online. My office will generally have my client’s complete the session on the phone in my office while we are working on their bankruptcy filing.
Some of my clients when they are first informed about the pre-filing credit counseling become apprehensive that the credit counseling agency may deny them and not allow their bankruptcy case to be filed. I reassure them that the bankruptcy law states that they must simply complete the session and get the certificate. You could be Bill Gates and be worth billions and the credit counseling agency must provide you with the certificate if you complete the briefing.
Most attorneys and even Judges feel the mandatory credit counseling requirement is a worthless exercise and that it does not meet its intended goal of reducing the number of bankruptcy filings. When the law was enacted in 2005 that made both the “pre-filing briefing” and “pre-discharge education” a requirement, there was a feeling that many unnecessary bankruptcy cases were being filed that otherwise could have been in some type of debt management program. Having been a Michigan bankruptcy attorney for over twenty years and having helped thousands of bankruptcy clients during that time, I can honestly say that the vast majority of people that file are doing so because the have been pushed to do so by creditor actions during tough times and have no other viable alternative.
The pre-bankruptcy credit counseling requirement is easy to complete and will get you on the road to becoming debt free.
The law is the law and unless Congress eliminates the credit counseling requirement, it must be completed. For the most part, much of what you will learn during the credit counseling briefing are things you most likely already know about money management however, some of my clients actually report to me that they benefited from the briefing in that they learned a little about putting together a budget or realized how much they actually needed to file bankruptcy and were reassured that they were making the right decision afterward. Just view the credit counseling briefing as a simple step, done on the phone in my office or in your home that will allow you to file your bankruptcy to permanently wipe out your debt with a bankruptcy discharge.
Walter Metzen is a Board Certified Bankruptcy Attorney in Michigan and offers free consultations regarding all consumer debt related matters. Feel free to call me toll free at 800-398-3328.
Michigan Bankruptcy Attorney Walter Metzen is a board certified consumer bankruptcy attorney practicing in the Detroit bankruptcy court.