What is A Credit Counseling Certificate in Bankruptcy?



Ted Owen from Clearwater, Florida asks the Bankruptcy Attorney, What is a Credit Counseling Certificate as used in Bankruptcy?   The Credit Counseling Certificate is an invention of the 2005 Bankruptcy Act passed by Congress and signed by George W Bush.

The Credit Counseling Certificate became a requirement for all those filing Bankruptcy.  With a few exceptions, any Individual seeking to file Bankruptcy must first procure a Credit Counseling Certificate.  The Credit Counseling Certificate basically certifies that the subject Individual went through a process to determine whether there was an alternative option available, based upon his or her circumstances, that would permit the Individual to escape filing Bankruptcy.  For example, the Individual may be eligible to participate in a Credit Counseling Program that would permit that person to reorganize his Debts into a more manageable monthly payment.

The US Trustee’s Office, I believe, determines what Companies or Organizations may be permitted to issue Credit Counseling Certificates.  The Requirement of a Credit Counseling Certificate is a ridiculous mandate.  I recall a Study that was conducted showing that nearly 100% of those who sought a Credit Counseling Certificate, were granted one by the Company or Organization from which they sought such a Certificate.

Generally, most Bankruptcy Attorneys will have a list of Organizations that are approved to issue Credit Counseling Certificates.  There are about 20 Organizations of which I am aware that will issue a Credit Counseling Certificate.  The least expensive I am aware of currently is Summit Financial Education, which will issue a Credit Counseling Certificate for $9.95, provided you apply on-line, and have interaction with the Credit Counseling Counselor through email.  The telephone consultation is almost $30.   Some Credit Counseling Organizations will charge up to $100 for a Credit Counseling Certificate.

There are exceptions where a Debtor may escape the requirement of the Credit Counseling Certificate.  One exception is where it is deemed, by the United States Trustee, in the Debtor’s District, that there is no feasible method by which the Debtor may obtain the Certificate.  This is probably a seldom used or accepted exception, especially because most Credit Counseling Organizations will grant the Certificate either through the Debtor using their website, or through a phone consultation.

Here is a Video explaining the Credit Counseling Certificate.  Thank you Ted Owen from Clearwater, Florida.

Image credit: creo77