FTC Explains Requirement and Offers Tips for Selecting a Credit Counselor
Beginning October 17, 2005, consumers filing for bankruptcy will be required to go through a government-approved credit counseling program six months prior to filing for bankruptcy protection.

The required 90-minute counseling session, which includes a complete budget analysis can take place in person, over the phone, or online. Though credit counseling companies customarily charge for its services, those organizations approved by the government must waive the fee for anyone who cannot afford to pay. After the counseling is complete, consumers must receive a completion certificate and consumers should check to make sure they receive the correct certificate for the bankruptcy court where they will be filing.

As a result of Hurricane Katrina, the credit counseling requirement has been temporarily waived for consumers filing in Louisiana and the Southern District of Mississippi.

Credit counseling organizations advise consumers on managing money, debts and developing a budget. Some credit counselors will recommend and negotiate a debt management plan (DMP) for their clients. In a DMP, consumers deposit money each month with the credit counseling organization, which uses the money to pay off the debts according to a schedule agreed upon between the consumer and their creditors. A DMP is not required for consumers who are filing for bankruptcy, but if consumers do use one, they must provide a copy of the plan to the bankruptcy court upon filing.

For more information about other changes in the bankruptcy law and how they affect consumers, visit www.usdoj.gov/ust/bapcpa/index.htm. For more information about credit issues and choosing a credit counselor, visit www.ftc.gov/credit. For important questions to ask when reviewing government-approved credit counseling– including inquiries about fees, counselor training, and services offered, visit http://www.usdoj.gov/ust

This entry was posted on Monday, November 21st, 2005 at 11:24 pm by Debt Relief Blog and is filed under Bankruptcy, Credit Counseling. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.