What you Must Do Before Filing Bankruptcy?
You must receive budget and credit counseling from an approved credit counseling
agency within 180 days before your bankruptcy case is filed. The agency will review
possible options available to you in credit counseling and assist you in reviewing
your budget. Different agencies provide the counseling in-person, by telephone,
or over the Internet. You must have a certificate from the agency showing that you
received the counseling before your bankruptcy case was filed. Most approved agencies
charge for the pre-filing counseling between $30-$50, however the law requires approved
agencies to provide bankruptcy counseling and the necessary certificates without
considering an individual's ability to pay. If you can not afford the fee, you should
ask the agency to provide the counseling free of charge or at a reduced fee. Debt
management plans; A DMP is a plan to repay some or all of your debts in which you
send the counseling agency a monthly payment that it then distributes to your creditors.
Debt management plans can be helpful for some consumers. For others, they are a
terrible idea. The problem is that many counseling agencies will pressure you into
a debt management plan as a way of avoiding bankruptcy whether it makes sense for
you or not. You should not consider a debt management plan if making the monthly
plan payment will mean you will not have money to pay your rent, mortgage, utilities,
food, prescriptions, and other necessities. It is important to keep in mind these
important points:
. If bankruptcy can't be avoided at all costs. In this case, bankruptcy may be the
best choice for you.
. If you sign up for a debt management plan that you can't afford, you may end up
in bankruptcy anyway (and a copy of the plan must also be filed in your bankruptcy
case).
. There are approved agencies for bankruptcy counseling that do not offer debt management
plans. It is usually a good idea for you to meet with an attorney before you receive
the required credit counseling. Unlike a credit counselor, who can not give legal
advice, an attorney can provide counseling on whether bankruptcy is the best option.
If bankruptcy is not the right answer for you, a good attorney will offer a range
of other suggestions. The attorney can also provide you with a list of approved
credit counseling agencies, or you can check the website for the United States Trustee
Program office at
www.usdoj.gov/ust.