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Is credit counseling required before filing for bankruptcy?

When Tennesseans think about bankruptcy they often focus on the end point: the discharge of their debt. Bankruptcy can result from any number of debt types including medical debt, credit card debt or some other type of debt. But bankruptcy is not just its end point. There is a beginning, a middle and an end. Along the way, Tennesseans will need to complete a variety of steps. One of those steps is credit counseling.

Can anyone be a credit counselor? No. Only people and organizations approved by the Department of Justice's U.S. Trustee Program can act as credit counselors.

Does a person need to complete credit counseling before filing for bankruptcy? Yes. As part of a bankruptcy filing, a filer must include a certificate of completion. These certificates are individually numbered (to prevent fraud) and produced through an automated and centralized system.

What goes on during pre-bankruptcy credit counseling? Several things. First, the counseling should begin by evaluating the person's financial situation. After that, the counselor should speak about budgeting and bankruptcy alternatives. Covering those topics normally takes 60 to 90 minutes.

Do counseling sessions have to be done in person? No. Counseling can happen in person, but it doesn't have to. It can also be done over the phone or online.

Counseling sounds expensive; what if you don't have enough money? No problem. If a person cannot afford the counseling session, they can request a fee waiver. But, generally, the fee should not be too onerous-a session typically costs around $50.

The requirement to get pre-bankruptcy credit counseling is just one of many expectations that might surprise a Tennesseans as they begin the bankruptcy process. To learn more about the steps involved in that process, Tennesseans may benefit from speaking with an experienced bankruptcy attorney.

Source: Federal Trade Commission, "Filing for Bankruptcy: What to Know," Accessed Dec. 13, 2016

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Mark T. Young & Associates
2895 Northpoint Blvd.
Hixson, TN 37343

Toll Free: 888-376-0282
Phone: 423-933-1606
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