What Is The Credit Counseling Requirement?

Individuals are not eligible for relief under any chapter of the United States Bankruptcy Code unless they obtain “an individual or group briefing” from an approved nonprofit credit counseling agency before the case is filed.

1. Agencies Must Be Approved. The credit counseling agency must be approved by the United States trustee. You can go to the U.S. Trustee website for a list of approved credit counseling agencies.

2. 180 Days Before Case Is Filed. The counseling session must occur within 180 days (roughly 6 months) before filing for bankruptcy. A counseling session occurring more than 6 months before the case does not count as a valid session.

3. Certificate Required. The Debtor must obtain a certificate which proves that the counseling session took place. The certificate must be filed with the bankruptcy pe­tition.

4. Method (in Person, Telephone or Internet). The required briefing may take place in person, by telephone or on the internet.

5. Fee. The law states that the agency must provide the counseling session without regard to the debtor’s ability to pay a fee. However, there are no published standards to determine the income level at which a person can be said to have an ability to pay. Most approved agencies charge a fee between $9.95 and $60 for the session.

6. Exceptions. There are very limited exceptions to the credit counseling requirement. The only exceptions are for:

a. Adequate Counseling Not Available. Districts in which adequate counseling services are determined by the U.S. trustee or bankruptcy administrator not to be available. This exception does not apply to cases filed in the Northern District of Texas.

b. Incapacity, Disability or Military Duty. Debtors who are incapacitated, disabled, or on active military duty in a combat zone. A person is considered “incapacitated” only if he has a mental illness or mental deficiency such that he is incapable of realizing and making rational decisions with respect to his financial responsibilities. A “disability” means that the debtor is so physically impaired as to be unable, after reasonable effort, to participate in an in-person, telephone, or in­ternet briefing.

c. Exigent Circumstances. The exception relied upon most is for situations involving exigent circumstances. Exigent circumstances means that the debtor was required to immediately file the case without completing the counseling session. To qualify, the debtor must:

  • file a written certification with the court;

  • describe exigent circumstances that merit a waiver of the counseling requirement;

  • state that the debtor requested credit counseling from an approved agency before the case was filed;

  • state that the counseling was unable to obtain the services during the 5-day period beginning on the date on which the debtor made that request.

The court cases that have interpreted this exception have been very strict in enforcing it. A debtor will almost never be able to come to a lawyer within the last few days before a foreclosure sale and file a case without completing the credit counseling session. The debtor will never be able to excuse a failure to at least try to obtain credit counseling or credit repair before filing the case by obtaining counseling the day after (or even one minute after) the case is filed. The court simply has no discretion to allow the debtor to obtain the counseling after the case is filed if he/she did not even try to obtain the counseling services before the case was filed.

As a result of these requirements, the exigent circumstances exception will almost never apply.

If you have questions about bankruptcy, I recommend using a qualified Fort Worth bankruptcy attorney.  As an experienced and dedicated Fort Worth bankruptcy attorney, I can offer advice on how to proceed based on your specific situation.  You and I can meet face to face to discuss your options.  I look forward to helping you become debt free.  To schedule a FREE consultation, please contact me at (817) 732-7590 or (972) 819-3861.  You can also send me an E-mail or complete the Free Case Evaluation.