Consumers Must Undergo Credit Counseling Post-Instatement of The New Bankruptcy Law - new

The new bankruptcy law went into practice in mid-October of 2005. The Bankruptcy Abuse Prevention and Consumer Protection Act calls for consumers to receive court ordered credit counseling within 180 days after filing for bankruptcy. Credit counseling services must be pre-approved by the presiding court in order for the sessions to stand as legitimate.

Several options present to the consumer with regards to where they can receive credit counseling services, such as online, by phone, support groups, one-on-one in-person sessions or any number of the court’s pre-approved credit counseling services. The U.S. Trustees Office holds the responsibility of approving certain counseling agencies to take part in the new law’s requirements. Non-profit counseling services and educational institutions may be approved by the U.S. Trustees Office in providing the required services for the consumer under the new law passed for details regarding filing for bankruptcy.

Credit companies and higher positioned lobbyist pushed for new bankruptcy laws to be applied towards consumers in order to make it harder for them to file for bankruptcy in order to eliminate outstanding debt through a court procedure. The new requirement for credit counseling is thought to prevent consumers from filing for bankruptcy right away. The time where the consumer receives credit counseling gets used by the creditors to try and enact a court ordered garnishment of wages so the consumer will not get away with discharging all of their outstanding debts.

Bankruptcy lawyers often offer their clients the phone services for credit counseling, since these sessions usually only take up to 1 hour in order to complete and the bankruptcy process goes underway immediately.

The law protects consumers from agencies charging incredible rates for credit counseling. No institution or organization may charge a consumer more than 50.00 in order to go through one of their credit counseling programs before filing for bankruptcy. The consumer obtains a certificate of completion after undergoing credit counseling and must present this document along with other application papers, such as the bankruptcy petition at the time of filing.