Credit Counseling Requirement in Bankruptcy

Mounting bills can put stress on any family's budget, but when there isn't enough income coming in to pay off those debts, late bill payments are inevitable. If you find yourself facing insurmountable debt and bankruptcy appears to be your only option, contact an experienced bankruptcy attorney to discuss your options.

At Wizmur & Finberg, LLP, in New Jersey, we have the bankruptcy experience you need and the help you can afford, to get your family or company back on its feet financially. Our skilled attorneys' more than 45 years of service to South Jersey clients means that we can get results for you too.

Contact any of our law office locations to find out more. Call us today at 856-988-9055.

Thank you for contacting Wizmur & Finberg, LLP. Your message has been sent.

Call us now

or use the form below.

Are you considering Chapter 7 or Chapter 13 bankruptcy in New Jersey?

At Wizmur & Finberg, LLP, our bankruptcy lawyers can show you how to achieve the fresh start you are seeking. We help clients to stop mortgage foreclosure, repossessions, wage garnishments and collection abuse at the hands of creditors.

We offer free consultations at a number of our South Jersey law offices, so contact us. In the Marlton area, call 856-988-9055.

At Wizmur & Finberg, LLP, our lawyers can help you execute your small to mid-sized company's Chapter 11 bankruptcy reorganization. Regardless of how bleak things may look right now, our track record with our clients has proven that there is life after debt.

We invite you to contact any of our South Jersey law offices for a free consultation. Call or e-mail us today. 856-988-9055.

In 2005, Congress passed and the president signed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), a bankruptcy reform law. One of the new requirements BAPCPA imposes on a new bankruptcy debtor is to receive credit counseling from an approved credit counseling agency before the bankruptcy filing. A bankruptcy lawyer experienced in consumer credit law, like one from Wizmur & Finberg, LLP in Marlton, New Jersey, can help debtors determine whether bankruptcy is the appropriate course of action for them and can advise them about these new counseling requirements.

Credit Counseling Briefing

Specifically, a debtor must receive an "individual or group briefing" from a nonprofit budget and credit counseling agency within 180 days before filing for bankruptcy. The briefing can be in person, by telephone or via the Internet. The law provides that the briefing must "[outline] the opportunities for available credit counseling and [assist] such individual in performing a related budget analysis." If a debt management plan is developed in the course of the required counseling, it must be filed with the bankruptcy court.

Approved Credit Counseling Agencies

In most states, the US trustee maintains a list of approved credit counseling agencies for use in the court districts in those states. In Alabama and North Carolina, this list is approved by bankruptcy administrators. The list of approved agencies is available on the US courts Web site. An approved agency is first on the list for a six-month probationary period, renewable in one-year increments. Approval can be revoked at any time. Interested persons can ask the court to review the approval of any agency.

To obtain approval, an agency must have qualified, experienced counselors who provide adequate counseling and have no financial interest in the counseling outcome; handle client funds securely; maintain an independent board of directors; charge reasonable and sliding scale fees; make certain disclosures; possess financial security to oversee repayment plans of clients; and maintain "quality, effectiveness, and financial security of the services it provides."

Exceptions to the Credit Counseling Requirement

There are some exceptions to the counseling requirement for certain debtors in particular situations. First, the court may waive the counseling requirement if there are "exigent circumstances" and the debtor made a request for counseling that an agency was unable to provide within five days. Second, a debtor is excused from the requirement if incapacitated by mental illness or deficiency, if physically impaired such that he or she is unable to participate with reasonable effort or if on active military duty in a combat zone. Third, counseling is not required if the trustee or administrator in a particular court district determines there are not enough approved credit counseling agencies available.

Criticisms of the Requirement

The credit counseling requirement has many critics. One argument is that it is too little and too late for a debtor in bad enough financial shape to be on the brink of bankruptcy. Supporters of the requirement feel that it will weed out people who are in financial crisis because of their own voluntary behavior; however, counseling agencies have found that most people counseled have had legitimate problems not caused by their own recklessness. Dismissal of a bankruptcy case for not obtaining required counseling is seen by some as harsh treatment for a debtor facing, for example, foreclosure on a modest home. Finally, depending on the interpretation of the judge, the dismissal could weaken the automatic stay in a subsequent bankruptcy filing.

Conclusion

Consumers considering bankruptcy as a future option should investigate the credit counseling requirement well before the anticipated bankruptcy filing. The experienced consumer and bankruptcy law attorneys at Wizmur & Finberg, LLP in Marlton, New Jersey, can be just the counselors and zealous advocates such a consumer needs in trying economic times.

DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.

Back to Main