A debtor considering bankruptcy must bear in mind that a bankruptcy stays on his or her credit report for up to 10 years, making it difficult to get future credit such as mortgages and that any credit extended will probably cost more in terms of interest rates and fees. A debtor should also keep in mind that some debts must still be paid. Accordingly, it is essential to seek the advice of an experienced bankruptcy attorney before making potentially life-altering financial decisions.
Debt, whether from credit cards, medical expenses, mortgages, car loans or other sources, can mount quickly, and you may find yourself unable to keep up. At the Phoenix law office of Joseph C. McDaniel, P.C., our attorney has more than 30 years of bankruptcy law experience, and is one of fewer than 30 lawyers in the state designated as a Certified Specialist in Bankruptcy Law. If you are struggling with overwhelming debt, we can help you understand your bankruptcy options and get the debt relief you need.
We encourage you to learn more about our Arizona bankruptcy law practice. Our firm is dedicated to combining high-quality legal representation with the personal attention and service. Call 602-297-3025 or contact us online to schedule an appointment with an experienced Arizona bankruptcy lawyer. Your initial consultation is free.
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When you are facing overwhelming debt, turn to the experience and skill of Joseph C. McDaniel, P.C. Call 602-297-3025 or contact our Arizona office to schedule an appointment with an experienced lawyer.
Bankruptcy is your legal right to debt relief. Call 602-297-3025 or contact us online to schedule an appointment and find out how we can help you get a fresh start.
Credit Counseling Requirement in Bankruptcy
In 2005, Congress passed and the president signed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), a bankruptcy reform law. One of the new requirements BAPCPA imposes on a new bankruptcy debtor is to receive credit counseling from an approved credit counseling agency before the bankruptcy filing. A bankruptcy lawyer experienced in consumer credit law, like one from Joseph C. McDaniel, P.C. in Phoenix, Arizona, can help debtors determine whether bankruptcy is the appropriate course of action for them and can advise them about these new counseling requirements.
Credit Counseling Briefing
Specifically, a debtor must receive an "individual or group briefing" from a nonprofit budget and credit counseling agency within 180 days before filing for bankruptcy. The briefing can be in person, by telephone or via the Internet. The law provides that the briefing must "[outline] the opportunities for available credit counseling and [assist] such individual in performing a related budget analysis." If a debt management plan is developed in the course of the required counseling, it must be filed with the bankruptcy court.
Approved Credit Counseling Agencies
In most states, the US trustee maintains a list of approved credit counseling agencies for use in the court districts in those states. In Alabama and North Carolina, this list is approved by bankruptcy administrators. The list of approved agencies is available on the US courts Web site. An approved agency is first on the list for a six-month probationary period, renewable in one-year increments. Approval can be revoked at any time. Interested persons can ask the court to review the approval of any agency.
To obtain approval, an agency must have qualified, experienced counselors who provide adequate counseling and have no financial interest in the counseling outcome; handle client funds securely; maintain an independent board of directors; charge reasonable and sliding scale fees; make certain disclosures; possess financial security to oversee repayment plans of clients; and maintain "quality, effectiveness, and financial security of the services it provides."
Exceptions to the Credit Counseling Requirement
There are some exceptions to the counseling requirement for certain debtors in particular situations. First, the court may waive the counseling requirement if there are "exigent circumstances" and the debtor made a request for counseling that an agency was unable to provide within five days. Second, a debtor is excused from the requirement if incapacitated by mental illness or deficiency, if physically impaired such that he or she is unable to participate with reasonable effort or if on active military duty in a combat zone. Third, counseling is not required if the trustee or administrator in a particular court district determines there are not enough approved credit counseling agencies available.
Criticisms of the Requirement
The credit counseling requirement has many critics. One argument is that it is too little and too late for a debtor in bad enough financial shape to be on the brink of bankruptcy. Supporters of the requirement feel that it will weed out people who are in financial crisis because of their own voluntary behavior; however, counseling agencies have found that most people counseled have had legitimate problems not caused by their own recklessness. Dismissal of a bankruptcy case for not obtaining required counseling is seen by some as harsh treatment for a debtor facing, for example, foreclosure on a modest home. Finally, depending on the interpretation of the judge, the dismissal could weaken the automatic stay in a subsequent bankruptcy filing.
Conclusion
Consumers considering bankruptcy as a future option should investigate the credit counseling requirement well before the anticipated bankruptcy filing. The experienced consumer and bankruptcy law attorneys at Joseph C. McDaniel, P.C. in Phoenix, Arizona, can be just the counselors and zealous advocates such a consumer needs in trying economic times.
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