Credit counseling is required prior to filing for bankruptcy states Glendale Heights bankruptcy lawyer. Under the current bankruptcy law which was revised on October 17, 2005, the government put in several prerequisites before a Chapter 7 or Chapter 13 bankruptcy case could be filed. The most important prerequisite was the credit counseling session. Before a case can be filed under any Chapter, an individual or both individuals in a joint case must complete a credit counseling session by a provider approved by the Office of the US Trustee. The credit counseling session could last anywhere from 20 minutes to an hour and a half and it could be done over the phone, in person or over the computer. It is simple become part of the bankruptcy process.
The credit counseling session is basically an information gathering exercise where the debtor will have to list income, expenses, assets and liabilities. The counselor will advise the debtor of some non-filing bankruptcy options but basically the requirement is satisfied once the individual submits to the counseling session. There is no obligation to try a non-bankruptcy remedy. There is no obligation to try any kind of debt settlement program. The debtor just simply has to complete the credit counseling in order to obtain a certificate which would enable that person to file for bankruptcy relief. This requirement applies to each of the different types of bankruptcy.
The cost of the credit counseling session has dropped drastically over the years. When credit counseling first was made available, the average price was approximately $50 per person. The price now has dropped to approximately $25 per person.
The reason for the credit counseling I believe is that the government wanted to put in place a mechanism whereby people would have to submit to counseling before they declared bankruptcy. The hope was that some people would decide not to file bankruptcy once they became aware of their non-bankruptcy options. For example, some people just need to work on their budget to enable them to get out of debt. There are other people that could benefit from some sort of debt settlement program.
However, the Congress was flawed in their desire to make people take credit counseling in an effort so that they would find alternatives to bankruptcy. Remember, the credit card lobby was a very strong lobby which pushed the bankruptcy reform back in 2005. The credit card companies have a strong interest in preventing people from filing bankruptcy. If the credit card companies can work out some sort of debt settlement program, they can salvage something as opposed to a bankruptcy case where the credit card companies receive nothing.