The Huggins Law Firm, PA
Call to Schedule a Free Consultation
Columbia 803-764-1558 Charleston 843-509-0039

Mandatory pre-bankruptcy credit and financial counseling

The rules dealing with personal bankruptcy filings changed in 2005 when Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act, and South Carolina debtors must now obtain two certificates. The first certificate is granted after petitioners have participated in pre-filing credit counseling sessions, and the second is received after the filing and before a discharge is granted. The latter course covers a variety of budgeting and financial topics.

Only consumer credit counseling agencies approved by the Executive Office for U.S. Trustees, which is a component of the Department of Justice, are permitted to grant pre-filing credit counseling certificates, and more than half are handed out by the nation's three largest such agencies according to the Government Accountability Office. During the counseling, individuals who plan to file a bankruptcy will learn about some of the positive and negative effects of bankruptcy and the impact that a Chapter 7 or Chapter 13 filing could have on their credit ratings.

The subjects covered in pre-discharge counseling are reviewed by the Justice Department, but the agency does not provide a list of specific topics that must be covered during the two-hour sessions. The goal of the course is to provide individuals with a better understanding of personal finances and the steps involved in reestablishing credit following a Chapter 7 or Chapter 13 bankruptcy.

Attorneys with experience in this area may also discuss alternatives to a personal bankruptcy such as debt settlement or consolidation, but they could also point out that only a bankruptcy filing puts an immediate end to harassment from creditors and bill collectors. Attorneys may also discuss the many myths surrounding bankruptcy and the peace of mind that can be achieved by escaping an unmanageable financial situation.

Source: U.S. Government Accountability Office, "Value of Credit Counseling Requirement Is Not Clear", April 24, 2007

No Comments

Leave a comment
Comment Information

The Huggins Law Firm, PA

Columbia Office
1812 Lincoln Street
Suite 201
Columbia, SC 29201

Phone: 803-764-1558
Fax: 803-764-1563
Columbia Bankruptcy Office

Columbia Office

Charleston Office
925-D Wappoo Road
Charleston, SC 29407

Phone: 843-509-0039
Fax: 866-481-2325
Map & Directions

Charleston Office