While there are an endless number of misconceptions about filing bankruptcy, the one I’ve encountered more often in the past weeks is the belief that participation in a debt management program or debt settlement program meets the new requirement for a “credit briefing” as a condition of filing bankruptcy.
The Bankruptcy “Reform” Act of 2005 added a requirement that individual debtors must get a “credit briefing” from an approved provider before filing a bankruptcy case. 11 USC 109(h) This addition was in response to the claim that people who didn’t need bankruptcy were being pushed into unnecessary cases by unscrupulous lawyers. This briefing from a third party was supposed to discourage those people from filng. The claim was nonesense, but that’s Congress in 2005.
Who offers approved credit briefing
To be clear, the credit briefing that is required in order to file bankruptcy must be from an organization approved by the UST in the district in which the bankruptcy case is to be filed. Most commercial debt settlement outfits are not approved.
Here’s the list of approved agencies . The briefing must be completed within 6 months of filing the case.
When do you get a credit briefing
The credit briefing or credit counseling must be completed before the case is filed, unless you can bring yourself within narrow exceptions.
Among the bad information out “there” about credit counseling is that the counseling takes 6 months.
No. The usual credit briefing session is between 30 minutes and an hour. It must take place within 6 months of filing; if you completed your session more than 6 months ago, you need to take it again.
Another complexity that I’ve seen twice in three weeks are individuals who attempted credit counseling on the internet and encountered a computer or connection glitch such that they didn’t “complete” the session. In each instance, the bankruptcy case was dismissed for failure to complete the briefing before filing.
While there is no evidence that credit counseling serves any useful purpose, it is the law. Fail to get credit counseling and the case is likely doomed.