| In the decades following the promulgation of the | | | | extremely difficult financial situation, the consumer |
| United States of America's bankruptcy law about a | | | | should discuss it first with the counselor before |
| century ago, a good number of Americans numbering | | | | counseling. This helps the counselor to consider the |
| into the millions had filed for personal bankruptcy. | | | | possibility of fee waiver before the session begins. |
| Majority of these numbers had done so during the | | | | The cost of counseling though depends on the |
| last thirty years. A number of factors are thought to | | | | organizations involve, is generally about $50. After the |
| be responsible for the reason such a large number | | | | counseling, a certificate of proof is issued to the |
| had taken the route to personal bankruptcy. | | | | consumer. The certificate is generated through a |
| Prominent among these is what some expert | | | | centrally coordinated automated system to prevent |
| described as lawyers' ads to "get out of debt quickly | | | | fraudulent issuance of certificate. The certificate is |
| and easily", the desire to have a "fresh start". | | | | filed along bankruptcy showing that the consumer is |
| Nonetheless, that was to change quickly. At least, | | | | qualified to file for personal bankruptcy. |
| the proceedings and processes leading to bankruptcy | | | | Debtor Education |
| would need some adjustments and fine tunings. | | | | A compulsory debtor education must be completed |
| The new bankruptcy law (Bankruptcy Abuse | | | | before discharge. Thus, it is expected that a |
| Prevention and Consumer Protection Act 2005) | | | | consumer will take debtor education soon after filing |
| brought about a new phase in bankruptcy filings in | | | | for personal bankruptcy. This helps to intimate the |
| the United States. The law is intended at making sure | | | | consumer about life after personal bankruptcy, the |
| that creditors do not suffer unnecessary lost, due to | | | | situations he is likely to face after discharging debt |
| consumer declaring bankruptcy when really they can | | | | through bankruptcy and the best way to prevent |
| manage to pay off their debts. On the other hand | | | | going bankrupt again. To achieve its purpose a debtor |
| consumers are protected. In a situation, where a | | | | education session must help the consumer to |
| consumer could not genuinely pay his debt, he could | | | | appreciate the following points: |
| file for personal bankruptcy in order to avoid | | | | How to achieve effective debt management |
| incessant harassments by creditors and their agents. | | | | How to make prudent use of credit cards |
| Thus, before a debt could be discharged through | | | | What items should not be bought on credit |
| personal bankruptcy, two major steps are | | | | How to develop a functional budget |
| prerequisites. | | | | The importance of a savings account |
| Credit Counseling. | | | | The fee for a debtor education session ranges from |
| The department of justice United States trustee | | | | $50 to $100. Still, a consumer who could no afford to |
| program approves some organization to provide | | | | pay could get a waiver by discussing with the |
| mandatory credit counseling for consumers | | | | organization's educators before the session begins. |
| considering personal bankruptcy. The trustee program | | | | As noted above, consumer education serves to |
| maintains the list of all organizations approves to | | | | protect consumers. To this end, a debtor is |
| provide this important service. Therefore, all | | | | encouraged to make good use of the opportunity |
| organization whose name does not appear on the list | | | | that is presented by asking all relevant questions |
| cannot provide a legal and valid credit counseling to | | | | about personal bankruptcy. Take note of points use |
| consumers. A valid counseling must be sought within | | | | plan to use. This is necessary because many of us |
| 180 days before filing. | | | | have come to realize that our bankruptcy is not a |
| What aspect should a credit counseling class cover? | | | | function of insufficient pay, but some little mistake |
| To be effective and achieve its intended purpose of | | | | we made. Therefore a good debtor education can go |
| preventing abuse and protecting consumer, a credit | | | | a long way to prevent future occurrence. |
| counseling session must give consideration to: An | | | | As with the credit counseling program, the United |
| objective evaluation of the consumer's financial | | | | States trustee program appoints some organizations |
| situations; The consumer's budget plan; Available | | | | to provide this service. Visit the U.S trustee program |
| alternatives to bankruptcy. | | | | website to find the list of approved organizations in |
| Having discussed what should be covered during a | | | | your area. A certificate indicating that you have |
| credit counseling session; the next question that | | | | completed the debtor education program is issued at |
| naturally comes to mind is what is and who bears the | | | | the end of the session. This must be presented to |
| cost of credit counseling? Well, the approved | | | | the court. Subsequently, the debt could be |
| organizations are out to do business. Thus, they | | | | discharged. |
| collect fees from consumers. However, in an | | | | |