Understanding the Purpose of a Bankruptcy Declaration

What is a Bankruptcy Certificate?

A bankruptcy certificate is a document that serves as evidence that you have successfully completed credit counseling and a debtor education course, which are required steps in the bankruptcy process. You must obtain a bankruptcy certificate showing completion of credit counseling before you can file for bankruptcy. After filing for bankruptcy, you will need to enroll in a debtor education course and obtain a separate bankruptcy certificate as proof of completion.

How Bankruptcy Certificates Function

Only credit counseling companies and debtor education courses that have been approved by the U.S. Trustee Program are permitted to issue bankruptcy certificates. In the states of Alabama and North Carolina, where the U.S. Trustee Program does not operate, individuals must find a credit counseling service and debtor education course approved by the bankruptcy administrator in their judicial district.

What Takes Place During Credit Counseling?

During credit counseling, a counselor will help evaluate your financial situation and determine if bankruptcy is the right option for you. The service must address the specifics of your financial circumstances and provide a plan for managing your finances effectively. Upon completion of credit counseling, you will receive a certificate valid for 180 days, which must be included in your bankruptcy petition if you choose to file.

What Happens in the Debtor Education Course?

Following bankruptcy filing, you must complete a debtor education course covering budgeting, money management, and responsible credit usage. Upon finishing the course, you will receive a bankruptcy certificate that must be submitted to the bankruptcy court for your debts to be discharged. Your course provider may file the certificate on your behalf, but it is not mandatory.

Requirements for Bankruptcy Certificates

A credit counseling session typically lasts 60 to 90 minutes and can be completed in person, by phone, or online. The average fee for credit counseling is around $50. A debtor education course takes approximately two hours and costs between $50 and $100. All fees associated with these services must be disclosed upfront, and providers cannot charge for a bankruptcy certificate unless fees have been clearly communicated prior to the service.

What to Look for in a Bankruptcy Counselor

When selecting a bankruptcy counselor, ensure they are approved by the U.S. Trustee Program or your local bankruptcy administrator to issue your bankruptcy certificate. Ask about additional services offered, counselor credentials, and how personal and financial information will be safeguarded. It is crucial to choose a reputable counseling service to guide you through the bankruptcy process.

Key Points to Remember

Remember that separate bankruptcy certificates must be obtained for completing pre-filing credit counseling and post-filing debtor education. Ensure that credit counseling agencies and debtor education courses are approved by the appropriate regulatory bodies before enrolling. Be aware of any additional fees for a bankruptcy certificate and inquire about waivers if you are unable to afford the services.