When filing for Chapter 13 bankruptcy, credit counseling is an essential aspect of the process. The purpose of credit counseling is to ensure the person filing for bankruptcy has no other reasonable options in order to ease their debt burden. It also helps you develop a suitable repayment plan, one that you will be able to keep up with over the next three to five years.

Many filers have questions about credit counseling and how they can fulfill this obligation to make certain their repayment plan is approved by the court. This guide explains a few of the basic principles so you know what to expect.

When must credit counseling be completed?

The credit counseling requirement must be satisfied before a person can file for bankruptcy. It is not possible to delay the session until the bankruptcy is already in progress. Additionally, filers are also required to undergo a debtor education course after the completion of the repayment plan. Debtor education is meant to help the filer implement good financial habits to prevent future financial instability.

Do I have to cover the costs of credit counseling?

Each individual filer is responsible for the costs of credit counseling. Filers who demonstrate an inability to pay can access free services or a lower rate provided their income falls below 150% of the current poverty level. For example, the poverty guideline for a one-person household in 2019 was an annual income of $12,490. That means a person’s annual income must be below $18,735 in order for credit counseling fees to be waived or reduced.

What happens when a married couple is filing bankruptcy jointly?

It is not necessary to attend two separate credit counseling sessions when filing bankruptcy jointly as a married couple. However, at the end of the process, each spouse will receive his and her own credit counseling certificate to show that the requirement has been satisfied.