Frequently Asked Questions: Bankruptcy Counseling

What information do I need to have available for my consultation?

To help you more efficiently, you must have the following items with you during your consultation:

• List of monthly bills with monthly amounts (rent/mortgage, utilities, food, etc.)
• Most recent creditor statements dated with in the last 30-90 days showing account numbers and balances. (If you completed these forms on our website, you still need to have these statements; we do not have copies of that information.)
• Household Income verification, such as pay stubs, tax forms, etc.
• Valid Photo ID (telephone appointments can mail or fax us a copy prior to your scheduled appointment)
• Any recent letters from your creditors dated with in the last 30-90 days.
• If your mortgage payment is past due, you will need to have copies of mortgage loan documents, latest loan statement, and any lender correspondence.

What are the benefits of the pre-filing counseling?
For most people, the decision to file bankruptcy is one of the most serious financial decisions they will make. The pre-filing counseling helps the consumer to fully understand the bankruptcy process, the long- and short-term consequences of bankruptcy and alternatives to bankruptcy that may be available. With this information, the consumer is able to weigh the advantages, disadvantages and options before making such an important decision.

What takes place at the Pre-Filing Counseling Session?
During the approximately 90-minute session, the counselor will obtain information from the consumer about income, household expenses and debts and make a full budget analysis. The counselor will explain alternatives to bankruptcy and any options that may help with the financial situation, give a complete overview of the bankruptcy process and discuss the advantages and disadvantages of bankruptcy. Counseling can be face-to-face, over the phone, or via Internet. Clients that complete this counseling will be issued a certificate which is required for filing a bankruptcy.

What happens at the Pre-Discharge Education Course?
During this 2-hour course, participants will learn how to more effectively manage their money, understand the uses of credit and how to re-establish a good credit history, recognize and avoid predatory lending, and learn how to protect themselves against identity theft. Participants who complete the course will receive a Certification of Completion that they will file with the court in order for their debts to be discharged.

Call 800-479-6026 or your local office for details or to register for the course. You may also register for the course by clicking here.

This information addresses issues relating to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which took effect on October 17, 2005.

What are the major changes in the law?
The 3 major changes that affect most consumers are:

• Requirement to attend pre-filing counseling and pre-discharge education.
• Means test to determine whether client has the means (can afford) to pay back some or all debt through a Chapter 13, or whether Chapter 7 is the only viable option.
• Increase in the homestead exemption from $10,000 individual to $50,000 individual and from $20,000 joint to $100,000 joint.

With regard to financial counseling and education, what has changed as a result of the new bankruptcy law?
For the first time, the law provides for financial counseling and education to help consumers understand bankruptcy, take a look at alternatives, and learn how to better manage their financial resources. Prior to filing, individuals are required to receive a briefing from an approved non-profit budget and credit counseling agency. Before completing the bankruptcy process and obtaining the discharge, individuals must complete a course on personal financial management.