CREDIT COUNSELING FAQ

Q: How does an individual locate an agency that offers credit counseling in languages other than English?

A: If an approved agency offers services in languages other than English, those languages are noted on the agency profile under the judicial district where approved to provide services. The majority of services for individuals with limited English proficiency are offered via the telephone, although there are a number of agencies offering in person counseling in languages other than English.

Q: What efforts should approved credit counseling agencies undertake to accommodate clients who have no or limited proficiency in the English language?

A: Approved agencies should make every reasonable effort to accommodate clients with limited or no proficiency in the English language. Such accommodation may include providing services in the client's language; permitting community volunteers, friends, or family members of the client to attend the credit counseling session and provide translation; or referring the client to an approved agency that offers services in the client's language.

Q: May an approved credit counseling agency that is also an approved provider of personal financial management instructional courses offer both services before a bankruptcy case is filed?

A: No. The Bankruptcy Code requires (with few exceptions) that credit counseling must be completed BEFORE an individual files for bankruptcy, and that debtor education must take place AFTER the bankruptcy case is filed. Accordingly, it is not appropriate for an approved agency to offer both services to clients in one pre-bankruptcy session.

Q: May a credit counselor advice a client on whether or when to file bankruptcy?

A: No. The decision on whether or when to file bankruptcy can only be made by the consumer and his/her attorney. Advice on the timing and necessity (or lack thereof) of a bankruptcy may constitute legal advice which could be deemed to be the unauthorized practice of law and be actionable by State authorities.

Q: Do individuals with primarily business debts have to obtain credit counseling prior to filing a chapter 7 or chapter 13 Bankruptcy?

A: Yes. Individuals who have primarily business debts must obtain credit counseling prior to filing bankruptcy.

Q: Do individuals with primarily business debts who intend to file a chapter 11 bankruptcy have to obtain credit counseling prior to filing bankruptcy?

A: Yes. Individuals who file a Chapter 11 business reorganization must obtain credit counseling from an approved agency.

Q: What determines an individual’s “ability to pay”?

A: Ability to pay must be determined on a case-by-case basis. One factor that must be considered is the client’s personal financial situation as reflected in the budget analysis that is completed pursuant to the statute.

Q: Do a husband and wife need separate financial counseling sessions if intending to file a joint bankruptcy petition?

A: Although a husband and wife may attend the same counseling session, each must obtain counseling and be issued separate certificates.

Q: May a credit counseling agency charge a separate fee for the issuance of a certificate which must be filed with a bankruptcy case?

A: An agency should clearly disclose to a consumer the fee that it charges for a counseling session, including any fee for the issuance of a certificate. There may not be a separate fee or charge for a certificate above and beyond the fee for the counseling session unless such fee is disclosed before the initial counseling session. An agency must always provide services, including issuance of the certificate, without regard to a client’s ability to pay.

Q: What determines an individual’s “ability to pay”?

A: Ability to pay must be determined on a case-by-case basis. One factor that must be considered is the client’s personal financial situation as reflected in the budget analysis that is completed pursuant to the statute.

Contact a Chapter 7 Bankruptcy Attorney at Dominguez & Associates, P.A.