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Understanding Bankruptcy Counseling and Education Requirements

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 made sweeping changes to the former bankruptcy law.  Among many other changes, the Act also mandates financial counseling and education. 

Before filing for personal bankruptcy, consumers are required to complete a pre-filing counseling session; and before receiving a bankruptcy discharge, debtors are required to complete an instructional course concerning personal financial management. These provisions are designed to provide debtors in bankruptcy with the skills and tools needed to avoid future financial problems.

To make the most of this benefit, consumers should carefully choose a quality bankruptcy counseling agency.  When choosing a bankruptcy counseling and education provider consumers should:

  • Verify that the counseling agency of choice is approved by the Executive Office for U.S. Trustees to deliver the necessary counseling and education.  A list of approved agencies can be found on the U.S. Department of Justice Web site.   
  • Check that the organization has the capacity to help better their clients’ overall financial situation through continuing counseling and financial education. 
  • Determine if the organization has the systems in place to effectively assist consumers in an appropriate timeframe.  For example, verify that the organization offers on-line counseling and education around the clock.
  • Consider the organization’s commitment to quality.  Make sure the organization is a member of the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies.  Verify that they are accredited by an independent third party organization, such as the Council on Accreditation (COA). 

How the program is helping

I just spoke with a member this morning who said he is using the debt management program, and he had nothing but positive things to say about his experience. He said he felt like he has been just treading water financially but now has some breathing room thanks to the program. Great to hear!

Chris Chichester | President
Jersey Central Federal Credit Union