Before you file for chapter 7 bankruptcy or chapter 13 bankruptcy you must consult a nonprofit credit counselling agency. The purpose for this counselling is to see whether there is a way to handle your debt load besides having to file bankruptcy but without adding to what you already owe.
Credit counselling requirements
In order to qualify for debt relief by way of bankruptcy, a debtor must receive counselling from an agency approved by the Office of the U. S Trustee, one hundred and eighty days before he/she files bankruptcy. Once the counselling is complete the agency will issue the debtor a certificate of completion. This certificate of completion must thereafter be filed within fifteen days of the bankruptcy filing date. The certificate must be accompanied by a repayment plan agreed upon between the debtor and the nonprofit credit counselling agency.
The purpose of the pre-bankruptcy credit counselling is to give the debtor an idea whether he/she indeed needs to file for bankruptcy or if there are alternative, informal repayment plans that could be used to get the debtor back on his/her ‘economic’ feet.
Whether a repayment plan is feasible or not, counselling is still a requirement. Feasibility is determined by the counselling agency which prepares a budget on the basis of the debtor’s income and expenses. After this is done the agency then reviews the debtor’s options for repaying the debt. Therefore, where it is consider not feasible to repay debts the expenses are very high and the income is very low and vice versa where repayment is feasible. In most cases, the agency confirms that the debtor does not have any options available for repayment to creditors other than filing for bankruptcy in order to deal with the debt.
While the bankruptcy law makes it a requirement for a debtor to get bankruptcy credit counselling, it does not make it a requirement for the debtor to go along with what the counselling agency proposes as a solution; whether repayment is feasible or not. However, if the agency does come up with a repayment plan you must file it along with your other bankruptcy documents. It is possible that if the credit counselling agency propose a repayment plan for the debtor, it is likely that the court could reason that the debtor file for chapter 13 bankruptcy to carry out the repayment plans. If this happens you will have an opportunity to argue as to whether you should have to repay all your debts.
The credit counselling agency may charge a reasonable fee for the provision of counselling services to the debtor.
But if the debtor is unable to afford the fee, the credit counselling agency will provide the counselling at a reduced fee or rate. This means that the services will be provided at a sliding fee scale and waiver fees for debtors below a specific income level. A reasonable fee may range from free to fifty dollars.
If you require more information regarding counselling for chapter 7 bankruptcy laws in Texas, contact a law firm of professionals who have experience in bankruptcy law.
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