Credit counseling is required before a case can be filed as a consumer under the United States Bankruptcy Code. Here’s the problem with the law as stated from a Bankruptcy attorney Gaithersburg. The people who are seeking credit counseling are doing so as a prerequisite to filing bankruptcy. They are being referred to the credit counseling agency as a requirement of filing by their bankruptcy attorney. Thus, by the time someone goes to credit counseling, they already have the idea that they wish to file bankruptcy and they are just trying to satisfy the requirement. These are not people that are seeking out these credit counseling agencies prior to seeking advice of an attorney. Thus, very few people if any go through the credit counseling with the end goal of avoiding bankruptcy. In fact, the opposite is the case.
So if a case should be filed before the credit counseling session is complete, then the case is void in some jurisdictions. In other jurisdictions, the case needs to be dismissed by the court. In any event, the credit counseling must be completed prior to the actual case filing. For an Illinois bankruptcy case, the judges differ on whether the case is void from the beginning or whether it is a valid case that simply needs to be dismissed by the court.
In recent years, one of the issues regarding the timing of the credit counseling has been addressed. Under the strict reading of the bankruptcy code, it appears that the credit counseling must be done prior to the actual filing by the calendar day. What I mean by this is if someone wants to file bankruptcy on a Tuesday, they must have completed the credit counseling before Tuesday. This means someone could do it on a Monday night at 11:45 PM, just 15 minutes before the calendar day turns. That is what the initial understanding was for many years. However, there is case law now which basically states that as long as the credit counseling is done prior to filing, then it is valid. So routinely now we have people come into the office and take the credit counseling the same day as the filing. As long as the completion is done prior to the actual filing, the case is valid.
For more information on credit counseling and filing a bankruptcy case, consult with a local bankruptcy lawyer to learn your rights. You will be able to learn about the process before you have to make an actual decision on filing versus not filing.