Chapter 7 Bankruptcy Credit Counseling

The modifications introduced to the bankruptcy law in the year 2005 came up with the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 that demands the debtors to undergo a credit counseling program before filing Chapter 7. The debtor has to prove his active presence in this program within the six month period before he files for Chapter 7 bankruptcy protection. A proof of the Chapter 7 has to be submitted by the debtor along with the petition for Chapter 7 besides other necessary documents prescribed by the law.

The debtor has to ensure that the credit counseling is derived from an organization licensed with either the National Foundation for Credit Counseling (NFCC) or the Association for Independent Consumer Credit Counseling Agencies (AICCA). The counseling sessions can be obtained in person, on the phone, or online explaining better financial management and can extend to over an hour.

The credit counseling organizations charge a fee for its services. But, under certain circumstances the fee is waived for anyone who are unable to meet it on account of their extreme financial burden. On the completion of the counseling session, the counseling agency will provide a certificate in proof of the same that can be submitted before the federal bankruptcy court along with the petition for Chapter 7. There are agencies who charge extra for the certificate. So make an inquiry of the same before seeking the counsel.

Conduct some preliminary measures in the selection process of the Chapter 7 credit counseling agency to enjoy maximum advantage. The credit counseling organization has to be one that is licensed under the approved authorities. Identify what they have to offer and the fee charged by them for their services. Ensure that these organizations are known for presenting a plan that can assist in avoiding the eruption of similar financial conditions in the future. Analyze the qualifications of your counselors, the training they possess and their efficiency. With some organizations charging extra for the issuance of the certificate, make inquiries of the same and avoid them if your financial situation calls for it.

The failure from the part of the debtor to undergo the Chapter 7 credit counseling will result in the rejection of the application by the federal bankruptcy court. The only exception to this clause is extended to those who are incapacitated, disabled or on active duty in a military zone.