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One of the more surprising things about bankruptcy I found was that you have to have post bankruptcy credit counseling after you file for bankruptcy. I knew you were required to take a class before you file. However, you also have to take a class before you can ever have your case discharged. When talking to my attorney I thought this was only if you were filing bankruptcy in Michigan. However, this is a requirement in the bankruptcy law and is required in every state where you have to file bankruptcy.

Why do you have to take credit counseling?

Previously people were filing bankruptcy after building up large sums of debt and the system was being abused. This was not just for the rich this included several other consumers that would recklessly charge up large sums of money and then file bankruptcy. Therefore in 2005 the US government passed bankruptcy reform. This was lobbied amongst the credit card companies and banks in which case they were trying to force more people to not qualify for bankruptcy while forcing more people into chapter 13 bankruptcies where they would be required to pay creditors back over a 3-5 year period. When this reform was passed one of the requirements was to take credit counseling classes in order to file and have your case discharged. Of course, you have to pay an additional fee to take these courses and they are only valid for so long ( 3-90 days). The companies that administer these classes go over your financial portfolio and work up a budget for you. One of the problems with this is these companies also try to talk you into entering into a debt management plan.

One of the problems is that more than of these debt management plans don’t work and you rely on the agency to pay your bills in which case and negotiate lower rates with credit agencies. These are all things that can be done by yourself with your creditors and you don’t have to send your money to a 3^rd party.

post bankruptcy credit counseling

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