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Credit Counseling and Debtor Education: Required by Federal Law before Petitioning for Illinois Bankruptcy Protection

Posted on in Bankruptcy

If you are currently considering debt relief through the liquidation of personal assets by petitioning for Chapter 7 bankruptcy protection, federal law mandates that you first seek pre-bankruptcy credit counseling and post-filing debtor education.

For all states, only excluding Alabama and North Carolina, The United States Trustee Program, under the jurisdiction of The U.S. Department of Justice, sanctions a number of approved credit counseling and debtor education programs. These non-profit organizations are available to the public through agency advertising confirming their association with the Trustee Program.

To determine which agency may be the best option for you, consult with your qualified bankruptcy attorney to review the list of approved credit counseling providers available online or through the bankruptcy clerk's office within your assigned district.

To further familiarize yourself with what to expect during the preparation phase of bankruptcy, the Federal Trade Commission (FTC), dedicated to the protection of American consumers, offers the following brief summary of key elements to discuss during your consultation with your attorney.

Pre-Bankruptcy Credit Counseling

  • Client must register with a federally approved agency;
  • Counseling is required to be completed before filing for bankruptcy protection;
  • Counseling offered must include a financial evaluation, plausible bankruptcy alternatives and creation of personal budget plan;
  • Counseling generally lasts 60 to 90 minutes and may be completed online, via telephone or in-person;
  • Agency is to fully disclose fees at the beginning of the session;
  • Waivers are available for those financially unable to pay;
  • Upon completion, agency must present a completion certificate;
  • Certificate is to be provided to bankruptcy attorney for inclusion with petition; and
  • To avoid fraud, all certificates are numbered and produced through a centrally automated system.

Post-Filing Debtor Education

  • Client must register with federally approved agency;
  • Requirement to be completed after filing and before discharge of debt;
  • Session may be completed online, via telephone or in-person;
  • Session generally lasts two hours and may be completed online, via telephone or in-person;
  • Session may cost upwards to $100;
  • If you are currently considering debt relief through the liquidation of personal assets by petitioning for Chapter 7 bankruptcy protection, federal law mandates that you first seek pre-bankruptcy credit counseling and post-filing debtor education;
  • Agency is to fully disclose fees at the beginning of the session;
  • Waivers are available for those financially unable to pay;
  • Upon completion, agency must present a completion certificate;
  • Certificate is to be provided to bankruptcy attorney for submission to judicial district; and
  • To devoid fraud, all certificates are numbered and produced through a centrally automated system.

Choosing a Credit Counselor

  • Contact only approved credit counseling providers;
  • Consult with your bankruptcy attorney; and
  • Review list of approved agencies online or by requesting a hard copy through your judicial district.

Ask the Key Questions

  • What type of services are available;
  • Can you devise a plan for avoiding future financial issues;
  • What are your fees and do you offer waivers;
  • Are your counselors accredited or certified; and
  • What is your compliance program for protecting my personal information?

Navigating the U.S. Federal Bankruptcy Code can be challenging. If you reside in the greater Illinois area and are considering filing for protection under Chapter 7 bankruptcy, the skilled Lake County bankruptcy attorneys of Newland & Newland, LLP have been successfully representing clients, not only in Lake Country but Cook, McHenry, DuPage and Will Counties as well. To learn more about how our experienced bankruptcy team can help you, contact one our convenient location to schedule your consultation.

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