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Before You File for Personal Bankruptcy:Information About Credit Counseling and Debtor Education

Produced in cooperation with the Department o Justices U.S. rustee Program

he Bankruptcy Abuse Prevention andConsumer Protection Act o 2005 launcheda new era: With limited exceptions, people who

plan to le or bankruptcy protection must get

credit counseling rom

a government-approved

organization within 180

days beforethey le. Tey

also must complete a debtor

education course to have theirdebts discharged.

Te Department o

Justices U.S. rustee Program

approves organizations to

provide the mandatory

credit counseling and debtor education. Only the

counselors and educators that appear on the U.S.

rustee Programs lists can advertise that they are,

indeed, approved to provide the required counseling

and debtor education. By law, the U.S. rustee

Program does not operate in Alabama and North

Carolina; in these states, court ocials called

Bankruptcy Administrators approve pre-bankruptcy

credit counseling organizations and pre-discharge

debtor education course providers.

Counseling and Education

Requirements

As a rule, pre-bankruptcy credit counseling and

pre-discharge debtor education may not be provided

at the same time. Credit

counseling must take place

beforeyou le or bankruptcy;

debtor education must take

place afteryou le.

In general, you must le acerticate o credit counseling

completion when you le

or bankruptcy, and evidence

o completion o debtor

education ater you le or

bankruptcy but beore your debts are discharged.

Only credit counseling organizations and debtor

education course providers that have been approved

by the U.S. rustee Program may issue these

certicates. o protect against raud, the certicates

are produced through a central automated system

and are numbered.

November 2006

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Pre-bankruptcy Counseling

A pre-bankruptcy counseling session with an

approved credit counseling organization should

include an evaluation o your personal nancial

situation, a discussion o alternatives to bankruptcy,

and a personal budget plan. A typical counseling

session should last about 60 to 90 minutes, and can

take place in person, on the phone, or online. Te

counseling organization is required to provide the

counseling ree o charge or those consumers who

cannot aford to pay. I you

cannot aford to pay a ee or

credit counseling, you shouldrequest a ee waiver rom the

counseling organization beore

the session begins. Otherwise,

you may be charged a ee

or the counseling, which

will generally be about $50,

depending on where you live, the types o services

you receive, and other actors. Te counseling

organization is required to discuss any ees with you

beore starting the counseling session.

Once you have completed the required

counseling, you must get a certicate as proo.

Check the U.S. rustees website to be sure that you

receive the certicate rom a counseling organization

that is approved in the judicial district where you are

ling bankruptcy. Credit counseling organizations

may not charge an extra ee or the certicate.

Post-Filing DebtorEducation

A debtor education course by an approved provider

should include inormation on developing a

budget, managing money, using credit wisely, and

other resources. Like pre-ling counseling, debtor

education may be provided in person, on the phone,

or online. Te debtor education session might last

longer than the pre-ling counseling about two

hours and the typical ee is between $50 and $100.

As with pre-ling counseling, i you are unable to

pay the session ee, you should seek a ee waiver rom

the debtor education provider. Check the list o

approved debtor education providers atwww.usdoj.

gov/ust/eo/bapcpa/ccde/de_approved.htm or at

the bankruptcy clerks oce in

your district.

Once you have completedthe required debtor education

course, you should receive

a certicate as proo. Tis

certicate is separate rom

the certicate you received

ater completing your pre-

ling credit counseling. Check the U.S. rustees

website to be sure that you receive the certicate

rom a debtor education provider that is approved

in the judicial district where you led bankruptcy.

Unless they have disclosed a charge to you beore

the counseling session begins, debtor education

providers may not charge an extra ee or the

certicate.

Important Questions to Ask

When Choosing a Credit

Counselor

Its wise to do some research when choosing acredit counseling organization. I you are in search

o credit counseling to ulll the bankruptcy law

requirements, make sure you receive services only

rom approved providers or your judicial district.

Once you have completedthe required counseling,

you must get a

certifcate as proo.

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http://www.usdoj.gov/ust/eo/bapcpa/ccde/de_approved.htmhttp://www.usdoj.gov/ust/eo/bapcpa/ccde/de_approved.htmhttp://www.usdoj.gov/ust/eo/bapcpa/ccde/de_approved.htmhttp://www.usdoj.gov/ust/eo/bapcpa/ccde/de_approved.htm

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Check the list atwww.usdoj.gov/ust/eo/bapcpa/

ccde/cc_approved.htm or at the bankruptcy clerks

oce or the district where you will le. Once

you have the list o approved organizations in your

judicial district, call several to gather inormation

beore you make your choice. Some key questions to

ask are:

nWhat services do you ofer?

nWill you help me develop a plan or avoiding

problems in the uture?

nWhat are your ees?

nWhat i I cant aford to pay your ees?

nWhat qualications do your counselors have?

Are they accredited or certied by an outside

organization? What training do they receive?

nWhat do you do to keep inormation about

me (including my address, phone number, and

nancial inormation) condential and secure?

nHow are your employees paid? Are they paid

more i I sign up or certain services, i I paya ee, or i I make a contribution to your

organization?

For More Information and

Assistance

Te U.S. rustee Program promotes integrity and

eciency in the nations bankruptcy system by

enorcing bankruptcy laws, providing oversight

o private trustees, and maintaining operational

excellence. Te Program has 21 regions and 95

eld oces, and oversees the administration o

bankruptcy in all states except Alabama and North

Carolina. For more inormation, visit

www.usdoj.gov/ust.

I you have concerns about approved credit

counseling agencies or debtor education course

providers, such as the ailure to provide adequate

service, please contact the U.S. rustee Program

by email at USTCCDEComplaintHelp@usdoj.

gov, or in writing at Executive Oce or U.S.

rustees, Credit Counseling and Debtor Education

Unit, 20 Massachusetts Avenue, N.W., Suite 8000,

Washington, D.C., 20530. Provide as much

detail as you can, including the name o the credit

counseling organization or debtor education course

provider, the date o contact, and whom you spoke

with.Te FC works to prevent raudulent, deceptive

and unair business practices in the marketplace

and to provide inormation to help consumers spot,

stop and avoid them. o le a complaint or get ree

inormation on consumer issues, visit ftc.govor

call toll-ree, 1-877-FC-HELP (1-877-382-4357);

Y: 1-866-653-4261. Watch a video, How to File

a Complaint, at ftc.gov/video to learn more. Te

FC enters consumer complaints into the Consumer

Sentinel Network, a secure online database and

investigative tool used by hundreds o civil and

criminal law enorcement agencies in the U.S. and

abroad.

FTC Facts For Consumers 3

http://www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htmhttp://www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htmhttp://www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htmhttp://www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htm

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Te Federal rade Commission (FC) is the nations consumer protection agency. Here aresome tips rom the FC to help you be a more savvy consumer.

n Know who youre dealing with. Do business only with companies that clearly providetheir name, street address, and phone number.

n Protect your personal inormation. Share credit card or other personal inormation onlywhen buying rom a company you know and trust.

n ake your time. Resist the urge to act now. Most any ofer thats good today will begood tomorrow, too.

n Rate the risks. Every potentially high-prot investment is a high-risk investment. Tatmeans you could lose your investment - all o it.

n Read the small print. Get all promises in writing and read all paperwork beore makingany payments or signing any contracts. Pay special attention to the small print.

n Free means ree. Trow out any ofer that says you have to pay to get a git or a reegit. I something is ree or a git, you dont have to pay or it. Period.

n Report raud. I you think youve been a victim o raud, report it. Its one way to geteven with a scam artist who cheated you. By reporting your complaint to1-877-FC-HELP or www.tc.gov, you are providing important inormation to helplaw enorcement ocials track down scam artists and stop them!

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For The Consumer Federal Trade Commission

ftc.gov 1-877-ftc-help

Federal Trade CommissionBureau of Consumer Protection

Division of Consumer and Business Education