What is pre-bankruptcy counseling?

| Jul 17, 2015 | Personal Bankruptcy |

Personal or consumer bankruptcy involves the reorganization or liquidation of a person’s assets in order to satisfy his debts. This New York bankruptcy law blog has discussed these methods of bankruptcy, also known as Chapter 13 bankruptcy and Chapter 7 bankruptcy, and steps that occur once the bankruptcy petition is filed. However, there are some requirements that a person must meet before he can submit his bankruptcy paperwork. One of those requirements is pre-bankruptcy counseling, and this post discusses just what it entails.

According to the Federal Trade Commission, people who file for personal bankruptcy have to undergo pre-bankruptcy counseling. Organizations that offer such counseling have to undergo an approval process, and anyone who utilizes a counseling service should make sure that it is authorized to provide bankruptcy guidance. Pre-bankruptcy counseling can cover a variety of topics, including but not limited to budgeting and options other than bankruptcy.

Once a person successfully completes pre-bankruptcy counseling he will receive a certificate. That certificate or proof of counseling completion is generally required to accompany one’s paperwork when filing for bankruptcy. It is a precursor to actually getting into bankruptcy court and helps some people get a grip on their financial circumstances before addressing their creditors.

Poor economic health should not be a bar to a person receiving pre-bankruptcy counseling. Organizations that offer the service must offer fee waivers for people whose finances might prevent them from paying for counseling. Additionally, organizations cannot charge individuals in bankruptcy counseling a fee for their completion documents.

The process of filing for bankruptcy starts long before a petition is ever filed with the bankruptcy court. Pre-bankruptcy counseling can be a useful tool for a person to recognize the realities of his personal finances. To learn more about pre-bankruptcy requirements, consider speaking with a legal professional who works in the personal bankruptcy field.

Contact Us

FindLaw Network


Member NACBA National Association of Consumer Bankruptcy AttorneysNYSBA New York State Bar AssociationNewLogoNysbaLogo
Law Office of Ronald V. De Caprio BBB Business Review