When you file for bankruptcy, you must complete a consumer credit counseling course and file a certificate with the court along with your bankruptcy petition. Most consumers must pay a fee to take this course. However, a new Internet service, ConsumerBankruptcyCounseling.info, provides the counseling for free. Read on to learn more about this new service.
To learn about the pre-bankruptcy financial counseling requirement, see our Credit Counseling & Debtor Education Requirement topic area.
Making Bankruptcy More Accessible to Those Who Need It
Inspired by the story of a family who was forced to file for bankruptcy as a result of a child’s healthcare issues, lawyers at a California law firm teamed with prominent members of the community and other corporate bankruptcy sponsors to create ConsumerBankruptcyCounseling.info, a non-profit venture designed to provide a no-cost/low-cost pre-bankruptcy credit counseling program.
Standard Cost vs. Ability to Pay
To satisfy the requirements of the bankruptcy law, pre-bankruptcy credit counseling courses must be approved by the Executive Office of the United States Trustee (EOUST), a division of the Department of Justice. Providers approved by the EOUST are allowed to charge a fee for their services. The fee is not set by EOUST, but providers must agree to make the services available without regard to a client’s ability to pay. This means that the providers must provide services to people who can’t afford to pay the usual charges, which generally range from $10 to $45.
Who Sets the "Ability to Pay" Guidelines?
The EOUST does not set guidelines for determining your ability to pay. Each provider determines this on their own. Some have specific guidelines that are set out on their website. Others require you to call and speak to a counselor to find out if you are eligible. Some of the criteria used by providers include:
- whether your income is below a certain level (generally ranging from below poverty level to two times the poverty level)
- whether your attorney is charging a fee
- whether you are subsisting on disability income, or
- whether you have some special circumstance which justifies a fee reduction.
Free Counseling from ConsumerBankruptcyCounseling.info
Unlike most other providers, ConsumerBankruptcyCounseling.info provides the counseling for free to everyone.
However, most people must pay $5 for the certificate saying you completed the counseling (you'll need this certificate when you file for bankruptcy.) As with other counseling providers, the certificate fee can be waived if you meet certain financial guidelines. For ConsumerBankruptcyCounseling.info, you can get a certificate fee waiver if:
- your income is below one and one-half times federal poverty guidelines, or
- you have other special circumstances that justify a waiver as determined by a counselor.
You must complete the free counseling before a decision will be made on the fee waiver for the certificate.
What is the Procedure?
ConsumerBankruptcyCounseling.info was able to accomplish their no-cost/low-cost goal by limiting their service to Internet based counseling. Counseling is provided online in English or Spanish and works like this:
- You follow the instructions on the website and the instructional video, gather your financial documents, and enter the information into the on-line questionnaire.
- You review the information on bankruptcy and bankruptcy alternatives and submit your information for a counselor’s review. The process is designed to take approximately one hour.
- After reviewing your information, the counselor emails you an analysis along with possible solutions to your financial situation.
- You can communicate further with the counsel by email to resolve any questions you may have. Once you have completed the process, if you decide to file for bankruptcy, you can request a certificate to file with the court.
The entire process takes three to five business days.
When Free Counseling Might Not Work for You
If the bankruptcy filing is not an emergency, you don’t mind an Internet service, and you don't qualify for free services elsewhere, ConsumerBankruptcyCounseling.info is currently the lowest cost service available.
But, you may need to consider other providers if:
- you prefer counseling by telephone or in person, or
- you need to obtain a certificate on an emergency basis, which may be the case if you are trying to stop a foreclosure sale, recover a repossessed vehicle, or release a wage garnishment.