It’s wise to do some research when choosing a credit counseling organization. If you are in search of credit counseling to fulfill the bankruptcy law requirements, make sure you receive services only from approved providers for your judicial district. Check the list at www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htm or at the bankruptcy clerk’s office for the district where you will file. Once you have the list of approved organizations in your judicial district, call several to gather information before you make your choice. Some key questions to ask are:
• What services do you offer?
• Will you help me develop a plan for avoiding problems in the future?
• What are your fees?
• What if I can’t afford to pay your fees?
• What qualifications do your counselors have? Are they accredited or certified by an outside organization? What training do they receive?
• What do you do to keep information about me (including my address, phone number, and financial information) confidential and secure?
• How are your employees paid? Are they paid more if I sign up for certain services, if I pay a fee, or if I make a contribution to your organization?

A pre-bankruptcy counseling session with an approved credit counseling organization should include an evaluation of your personal financial situation, a discussion of alternatives to bankruptcy, and a personal budget plan. A typical counseling session should last about 60 to 90 minutes, and can take place in person, on the phone, or online. The counseling organization is required to provide the counseling free of charge for those consumers who cannot afford to pay. If you cannot afford to pay a fee for credit counseling, you should request a fee waiver from the counseling organization before the session begins. Otherwise, you may be charged a fee for the counseling, which will generally be about $50, depending on where you live, the types of services you receive, and other factors. The counseling organization is required to discuss any fees with you before starting the counseling session.
Once you have completed the required counseling, you must get a certificate as proof. Check the U.S. Trustee’s website to be sure that you receive the certificate from a counseling organization that is approved in the judicial district where you are filing bankruptcy. Credit counseling organizations may not charge an extra fee for the certificate.

The U.S. Trustee Program promotes strength in the nation’s bankruptcy system by enforcing bankruptcy laws, providing oversight of private trustees, and maintaining operational excellence. The Program has 21 regions and 95 field offices, and oversees the administration of bankruptcy in all states except Alabama and North Carolina. For more information – www.usdoj.gov/ust.
If you have concerns about approved credit counseling agencies or debtor education courses, such as the failure to provide good service, please contact the U.S. Trustee Program by email at USTCCDEComplaintHelp@usdoj.gov, or in writing at Executive Office for U.S. Trustees, Credit Counseling and Debtor Education Unit, 20 Massachusetts Avenue, N.W., Suite 8000, Washington, D.C., 20530. Provide as much detail as you can, including the name of the credit counseling organization or debtor education course provider, the date of contact, and whom you spoke with.
The FTC works to prevent fraudulent, unclear and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Watch a new video, How to File a Complaint, at ftc.gov/video to learn more. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

A debtor education course by an approved provider should include information on developing a budget, managing money, using credit wisely, and other resources. Like pre-filing counseling, debtor education may be provided in person, on the phone, or online. The debtor education session might last longer than the pre-filing counseling – about two hours – and the typical fee is between $50 and $100. As with pre-filing counseling, if you are unable to pay the session fee, you should seek a fee waiver from the debtor education provider. Check the list of approved debtor education providers at www.usdoj.gov/ust/eo/bapcpa/ccde/de_approved.htm or at the bankruptcy clerk’s office in your district.
Once you have completed the required debtor education course, you should receive a certificate as proof. This certificate is separate from the certificate you received after completing your pre-filing credit counseling. Check the U.S. Trustee’s website to be sure that you receive the certificate from a debtor education provider that is approved in the judicial district where you filed bankruptcy. Unless they have disclosed a charge to you before the counseling session begins, debtor education providers may not charge an extra fee for the certificate.

As a rule, pre-bankruptcy credit counseling and pre-discharge debtor education may not be provided at the same time. Credit counseling must take place before you file for bankruptcy; debtor education must take place after you file.
In general, you must file a certificate of credit counseling completion when you file for bankruptcy, and evidence of completion of debtor education after you file for bankruptcy – but before your debts are discharged. Only credit counseling organizations and debtor education course providers that have been approved by the U.S. Trustee Program may issue these certificates. To protect against fraud, the certificates are produced through a central automated system and are numbered.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 launched a new era: With limited exceptions, people who plan to file for bankruptcy protection must get credit counseling from a government-approved organization 180 days before they file. They also must complete a debtor education course to have their debts discharged.

The Department of Justice’s U.S. Trustee Program approves organizations to provide the mandatory credit counseling and debtor education. Only the counselors and educators that appear on the U.S. Trustee Program’s lists can advertise that they are, indeed, approved to provide the required counseling and debtor education. By law, the U.S. Trustee Program does not operate in Alabama and North Carolina; in these states, court officials called Bankruptcy Administrators approve pre-bankruptcy credit counseling organizations and pre-discharge debtor education course providers.

We are providing a great deal of bankruptcy information for those considering, or just researching, bankruptcy.  This growing collection of information includes the complete bankruptcy code, and future sections will cover debt and all consumer options surrounding bankruptcy.

Federal Bankruptcy law benefits both debtors and creditors by seeing that debtors get debt relief and creditors collect some of the debts owed. The types of bankruptcy filings are referred to by the chapter of the federal Bankruptcy Code that describes them.

Generally, individuals use Chapter 7 Bankruptcy or Chapter 13 Bankruptcy. Each case is different, but someone with few or no valuable assets would prefer chapter 7 because it involves a liquidation of most or all assets. Chapter 13 bankruptcy is a reorganization of debts where the debtor and creditors must accept new terms for debt repayment.

Changes to the bankruptcy law in 2005 added a “means test.” The means test keeps filers with higher incomes from filing for Chapter 7 bankruptcy. Some people believe you must be completely broke to file chapter 7, but that is not the case. Actually, most people who would have qualified before the changes, will still qualify under the new law.

The means test deducts specific monthly expenses from the debtor’s income to find the debtor’s “disposable income.”  The higher the disposable income, the harder it is to file Chapter 7 bankruptcy. The first step is to compare the debtor’s income to the median income of the state in which the debtor resides.

Qualifying under the means test does not guarantee on qualifies for Chapter 7 bankruptcy, but it is the important starting point. If a debtor does not pass the means test, he/she may seek protection under a Chapter 13 bankruptcy.

“At the end of every seven years you shall grant a remission of debts. This is the manner of remission: every creditor shall release what he has loaned to his neighbor; he shall not exact it of his neighbor and his brother, because the LORD’S remission has been proclaimed.” – Deuteronomy 15:1,2

The origin of the word “bankruptcy” are the Latin words bancus (bench) and ruptus (broken). When a banker could no longer continue lending money, his bench was broken as a sign of inability to negotiate and lend.

The Unites States Constitution gives congress the power to establish “uniform laws on the subject of Bankruptcies” throughout the United States. There were several bankruptcy laws past in the 1800’s. These early bankruptcy laws were usually enacted in response to bad economic times. Before the 20th century, bankruptcy rules were more concerned with recovering the debts for creditors, and nearly all bankruptcies were involuntary. Modern rules for bankruptcy are more concerned with reorganizing the debtor’s finances rather than punishing the debtor. Although involuntary bankruptcies still exist, they are much less common than voluntary bankruptcy.

The  Bankruptcy Reform Act of 1978 created the current United States Code related to bankruptcy.

adversary proceeding
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A lawsuit arising in or related to a bankruptcy case that is commenced by filing a complaint with the court. A nonexclusive list of adversary proceedings is set forth in Fed. R. Bankr. P. 7001.

assume
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An agreement to continue performing duties under a contract or lease.

automatic stay
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An injunction that automatically stops lawsuits, foreclosures, garnishments, and all collection activity against the debtor the moment a bankruptcy petition is filed.

bankruptcy
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A legal procedure for dealing with debt problems of individuals and businesses; specifically, a case filed under one of the chapters of title 11 of the United States Code (the Bankruptcy Code).

bankruptcy administrator
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An officer of the judiciary serving in the judicial districts of Alabama and North Carolina who, like the U.S. trustee, is responsible for supervising the administration of bankruptcy cases, estates, and trustees; monitoring plans and disclosure statements; monitoring creditors’ committees; monitoring fee applications; and performing other statutory duties. Compare U.S. trustee.

Bankruptcy Code
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The informal name for title 11 of the United States Code (11 U.S.C. §§ 101-1330), the federal bankruptcy law.

bankruptcy court
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The bankruptcy judges in regular active service in each district; a unit of the district court.

bankruptcy estate
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All legal or equitable interests of the debtor in property at the time of the bankruptcy filing. (The estate includes all property in which the debtor has an interest, even if it is owned or held by another person.)

bankruptcy judge
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A judicial officer of the United States district court who is the court official with decision-making power over federal bankruptcy cases.

bankruptcy petition
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The document filed by the debtor (in a voluntary case) or by creditors (in an involuntary case) by which opens the bankruptcy case. (There are official forms for bankruptcy petitions.)

chapter 7
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The chapter of the Bankruptcy Code providing for “liquidation,”(i.e., the sale of a debtor’s nonexempt property and the distribution of the proceeds to creditors.)

chapter 9
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The chapter of the Bankruptcy Code providing for reorganization of municipalities (which includes cities and towns, as well as villages, counties, taxing districts, municipal utilities, and school districts).

chapter 11
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The chapter of the Bankruptcy Code providing (generally) for reorganization, usually involving a corporation or partnership. (A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. People in business or individuals can also seek relief in chapter 11.)

chapter 12
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The chapter of the Bankruptcy Code providing for adjustment of debts of a “family farmer,” or a “family fisherman” as those terms are defined in the Bankruptcy Code.

chapter 13
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The chapter of the Bankruptcy Code providing for adjustment of debts of an individual with regular income. (Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.)

chapter 15
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The chapter of the Bankruptcy Code dealing with cases of cross-border insolvency.

claim
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A creditor’s assertion of a right to payment from the debtor or the debtor’s property.

confirmation
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Bankruptcy judges’s approval of a plan of reorganization or liquidation in chapter 11, or payment plan in chapter 12 or 13.

consumer debtor
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A debtor whose debts are primarily consumer debts.

consumer debts
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Debts incurred for personal, as opposed to business, needs.

contested matter
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Those matters, other than objections to claims, that are disputed but are not within the definition of adversary proceeding contained in Rule 7001.

contingent claim
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A claim that may be owed by the debtor under certain circumstances, e.g., where the debtor is a cosigner on another person’s loan and that person fails to pay.

creditor
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One to whom the debtor owes money or who claims to be owed money by the debtor.

credit counseling
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Generally refers to two events in individual bankruptcy cases: (1) the “individual or group briefing” from a nonprofit budget and credit counseling agency that individual debtors must attend prior to filing under any chapter of the Bankruptcy Code; and (2) the “instructional course in personal financial management” in chapters 7 and 13 that an individual debtor must complete before a discharge is entered. There are exceptions to both requirements for certain categories of debtors, exigent circumstances, or if the U.S. trustee or bankruptcy administrator have determined that there are insufficient approved credit counseling agencies available to provide the necessary counseling.

current monthly income
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The average monthly income received by the debtor over the six calendar months before commencement of the bankruptcy case, including regular contributions to household expenses from nondebtors and income from the debtor’s spouse if the petition is a joint petition, but not including social security income and certain other payments made because the debtor is the victim of certain crimes. 11 U.S.C. § 101(10A).

debtor
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A person who has filed a petition for relief under the Bankruptcy Code.

defendant
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An individual (or business) against whom a lawsuit is filed.

discharge
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A release of a debtor from personal liability for certain dischargeable debts set forth in the Bankruptcy Code. (A discharge releases a debtor from personal liability for certain debts known as dischargeable debts and prevents the creditors owed those debts from taking any action against the debtor to collect the debts. The discharge also prohibits creditors from communicating with the debtor regarding the debt, including telephone calls, letters, and personal contact.)

dischargeable debt
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A debt for which the Bankruptcy Code allows the debtor’s personal liability to be eliminated.

disclosure statement
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A written document prepared by the chapter 11 debtor or other plan proponent that is designed to provide “adequate information” to creditors to enable them to evaluate the chapter 11 plan of reorganization.