Credit Counselling and Personal Financial Management

Credit counseling is a process used to help individual debtors with debt settlement through education, budgeting and the use of a variety of tools with the goal to reduce and ultimately eliminate debt. Credit counseling is conducted by a counselor authorized by a United States Trustee.

All individual debtors must undergo counseling before filing for bankruptcy. Upon the completion of the credit counseling, the debtor will be issued with a certificate that must be submitted to a bankruptcy court. Failure to submit the certificate will result in the dismissal of the bankruptcy case. The credit counselor may assist the debtor in coming up with a budget and a repayment plan, which can then be submitted to the court during the filing.

Upon the conclusion of the bankruptcy case, the debtor must take a Personal Financial Management course at an agency authorized by the United States Trustee. The course is compulsory for only chapter 7 and chapter 13 individual debtors.

After completing the course, the debtor must submit Official Form B 423 to the court. In Chapter 7 bankruptcy cases, the debtors must submit the course completion certificate within 60 days of the first scheduled 11 U.S.C. ยง 341 Meeting of Creditors.

For chapter 13 bankruptcy cases, the certificate of completion of the personal financial management course must be submitted to the court prior to the completion of all plan payments.

Failure to present certificates of completion of the courses could result in the closure of the cases without the issuance of a discharge. The debtor will consequently be required to pay a fee to reopen the case.