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The Mandatory Credit Counseling Before Filing for Bankruptcy: What to Expect


If you’ve recently begun the process of filing for bankruptcy in Maryland, you may have learned about the requirement that you undergo credit counseling prior to being allowed to file. The pre-filing credit counseling requirement is nothing to worry about, but it is a requirement for which you should plan when considering the timing of your bankruptcy filing. Read on to learn more about this requirement, and how to fulfill it.

In 2005, the sweeping changes made to the process of filing for bankruptcy included the added requirement that those filing for bankruptcy must first complete a session with a credit counselor. These sessions were originally intended to present the debtor with alternatives to filing for bankruptcy, such as the use of a payment plan arrangement with their creditors. With few exceptions, however, debtors who have decided to file for bankruptcy and who qualify to file under Chapter 7, simply do not have the ability to handle their debts in any way other than through bankruptcy. Nevertheless, all those filing for bankruptcy must meet the counseling requirement.

The process is simple: debtors choose a counseling agency from a list of those approved by the US Trustee for Maryland residents, and pay the required fee (which is required by law to be $50 or less). The debtor provides their financial information, including the amounts of income and debts, to the counselor, who will attempt to calculate a payment plan for those debts during the counseling session. These sessions last anywhere from 60 to 90 minutes and can be completed online, over the phone, or in person. In the vast majority of cases, the counselor will conclude that the debtor is unable to afford a payment plan, and will provide the debtor with a certificate indicating that they have completed the counseling requirement. This document must be filed with the court before a bankruptcy petition can be filed.

The most important aspect of the pre-filing credit counseling requirement may be the timing. Certificates of counseling completion expire after six months, so completing it too soon can backfire. However, the process is not instantaneous, and waiting until the last minute may delay the filing of your petition and have serious legal consequences. Speak with your Maryland bankruptcy lawyer about when to complete the credit counseling requirement.

If you are a Maryland resident who is facing serious amounts of medical or credit card debt and need help from a professional to help you escape that debt and turn over a new leaf, contact the compassionate and experienced Germantown consumer law and bankruptcy law firm Haeger Law, LLC for a consultation, at 888-463-3520.