Having a hard time paying your bills? Does it look like they keep adding up? A lot of people in this situation would think that filing for bankruptcy is the easy way out. In all reality, bankruptcy should be your very last resort. Most individuals are not aware of the long term effects of bankruptcy. People taking this course of action don’t know about the extensive process that happens before and after you file bankruptcy.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 states that people who plan to file for bankruptcy protection are now required to get counseling from an agency that is government approved within a six month time before filing.  After filing bankruptcy a debtor education course has to be completed.  The Department of Justice has a U.S Trustee Program in which only counselors and educators that show on the program's list will be able counsel you.  By law the U.S.  Trustees Program cannot run in Alabama and North Carolina because they have what are referred to as Bankruptcy Administrators. 

The credit counseling and debtor education might not come about all at once.  But it is required to complete both for those people who are filing bankruptcy.  The counseling must take place before filing, a certificate of credit counseling completion has to be attained when filing for bankruptcy.  The debtor education program generally occurs after the filing. 

The counseling session is composed of an evaluation of personal financial situations, a discussion of alternatives of bankruptcy, and a budget plan.  This session will commonly take about an hour, and the filer is given the option of taking the session in person, over the phone, or online.  For those who can't afford to pay for the counseling the organization is required to offer their services free of charge.  But for those who can afford to pay the fee is generally around $50 depending on the location.  Once the counseling is complete you are provided with a certificate as evidence you've taken the course. 

It is all up to you when deciding what organization you will end up using for credit counseling.  When you're calling around please make sure you ask some of the following questions.  What type of services do you offer?  What are you fees?  What if I cannot afford them?  What qualifications do your counselors have?  Will you help me develop a plan for avoiding problems in the future?  If you ask at least half of these questions, you will have a good idea about the organization and your decision making will be much easier. 

The educational courses will contain similar information as the counseling sessions, budgeting, how to use credit wisely.  Like the counseling sessions you also have many options on how you can take the educational courses, in person, online, or over the phone..  These courses will last longer at about two hours and the fees are somewhere between $50 to $100.  You may also seek a waiver if you are not able to pay.  You should also obtain a certificate as proof that you've taken the course.