If you file for bankruptcy then you must go through credit counseling, and fulfill certain financial management conditions so that your debt will be resolved and you get a fresh financial beginning. Until recent changes in the bankruptcy laws credit counseling was not mandatory. The revisions to the bankruptcy code included the requirement for a financial management course or credit counseling in an attempt to ensure that those filing for bankruptcy do not end up in the same position later on. The course can usually be completed online or over the phone, and is designed to help you understand how and where your finances started to go wrong so that previous mistakes are not repeated.
In some cases bankruptcy may be the result of losing your job, a catastrophic injury, or a prolonged illness that kept you from working on a regular basis. It may not seem to make sense to require credit counseling for an individual who has always paid their bills on time but experienced financial difficulties through no fault of their own. Having the tools available to manage your finances properly is the goal behind the credit counseling requirement. If you already understand financial management then a refresher course will not hurt. If you do not have the needed financial tools then this course will provide them.
Bankruptcy can be a very complex process, and each case is different and unique. The oversight required by the bankruptcy court to go through each case and determine whether a credit counseling course is warranted would be extremely time and labor intensive. It was much easier to simply require that all individuals and couples who file for bankruptcy take a financial management course instead. Before 2005 this requirement was not in place, and there were many cases of debtors who filed a new bankruptcy case as soon as the required time limit had passed from the previous filing.
The credit counseling requirement is not intended to punish you for filing for bankruptcy protection. This requirement was actually put into the bankruptcy law to help inform consumers on how to make good credit choices and the importance of eliminating bad credit. Many consumers have never been taught proper financial management methods, or how to obtain and use credit wisely. You must obtain credit counseling in the 180 days previous to filing your bankruptcy petition.
When you file for bankruptcy you will need to show the completion certificate for the credit counseling course. In addition you will need to take a financial management course after your case is filed but before you can receive a discharge in most cases. This course must be taken in the 6 months that follow your bankruptcy filing, and it can be taken a month or two after you file if desired. If the financial management course is not completed in the early stages of your case this may delay the discharge or create questions about the ability to discharge certain debts.