Credit Counseling Certificate

Individuals who file for bankruptcy now mandatorily have to obtain a credit counseling certificate before they do so. This is now a federal bankruptcy law, and everyone has to adhere to it, irrespective of their financial history. The purpose of this certificate is to provide the individual with some options before he files for bankruptcy, because by doing so he is leaving a permanent tarnish on his credit report and credit history.

A bankruptcy will affect all future dealings of the individual, so if there is a possible solution for the dilemma that he finds himself in, it must be made use of. It does not matter if the individual is filing for Chapter 7 bankruptcy, or Chapter 13 bankruptcy, he has to obtain a pre-bankruptcy credit counseling certificate.

Online Credit Counseling Certificate

There are many sources of online vendors who provide this certificate, and this is quite a simple procedure. The cost of such courses over the Internet is anything between $35 - $50, and the time span of the counseling session will be between 45 minutes to 2 hours. In this time period, the vendor will provide you with some different solutions to your situation, which you may or may not be aware of. The point is to help you figure out some bankruptcy alternatives before you go ahead and file for bankruptcy.

What you may not know is that once this certificate has been obtained, you will need to obtain a second certificate before you can file for bankruptcy. This is known as the 'Financial Management Course' certificate, and possession of this will prove that you have received enough information about money management and financial budgeting for the future.

Since credit purchases are a major part of the American economy, it is crucial to learn how to manage your expenses, and consolidate your savings. This is even more pertinent in the case of an individual who is filing for bankruptcy, because this means that the person is inept at handling his finances, and needs some external bankruptcy counseling and guidance. Without both these certificates you will not receive the bankruptcy discharge from your debts, and this will hold up your filing process. It is best to obtain both these certificates before you go ahead and file for bankruptcy, as they are valid for 180 days once they have been issued.

Sources of the Certificate

It is essential to approach the correct sources for a credit counseling certificate for bankruptcy. An organization known as the U.S. Trustee Program is the body that approves the vendors who can offer these certificates, and if you receive this certificate from an unrecognized source, it will be invalid. This will delay your bankruptcy filing so you must be careful about where you receive your certificate from.

The necessity of this certificate was made mandatory by the Bankruptcy Abuse Prevention and Consumer Protection Act that was passed in 2005. The purpose is to prevent people from filing for bankruptcy unnecessarily, especially when they have other options open to them. Some people use bankruptcy as a way to escape their debts, but they do so without realizing the ramifications of the act. Once a bankruptcy is recorded on an individual's credit report, future transactions become very very difficult. Ignorance about this fact is eradicated with the help of these counseling sessions, and a credit counseling certificate proves that the individual is aware of the consequences after bankruptcy.

You can also visit the website of the U.S. Trustee Program to find out more details about the entire process and what to expect from it. A credit counseling certificate is something that is a must before filing for bankruptcy, and there are no two ways about it.