Credit counseling before bankruptcy is mandatory for almost every individual filer. Each individual debtor must complete a budget and credit counseling session with an agency approved by the U.S. Trustee Program within the 180 days before your petition is filed, and the completion certificate is filed with the case. The rule applies to Chapter 7 and Chapter 13 alike.
Where the requirement comes from
Section 109(h) of the Bankruptcy Code, added in 2005, makes the counseling session a condition of eligibility. In plain terms, an individual who has not completed it, and who does not qualify for an exception, is not eligible to be a debtor at all. That is why courts tend to treat the requirement strictly rather than as a technicality.
What the session involves
The briefing can be done in person, by phone or online, individually or in a group. A counselor reviews your income, expenses and debts, outlines alternatives to bankruptcy and helps you prepare a basic budget. You are not obligated to sign up for anything the agency offers. If you want to compare one common alternative, our article on a debt management plan vs bankruptcy lays out the differences.
The certificate
When you finish, the agency issues a certificate of completion with the date and time. That certificate is normally filed with the petition; if the session was completed before filing but the certificate is not yet in hand, it can generally be filed within 14 days. If the agency prepared a repayment plan during the session, that plan is filed too.
If you are weighing bankruptcy and want to know where counseling should fall in your timeline, call (415) 754-0115 to schedule a free consultation, or reach us through our contact page.
Timing the 180-day window
The session must be completed during the 180 days before the filing date. A certificate taken too early simply expires: if the petition goes in on day 181, the course has to be repeated. Counseling taken after the petition is filed generally does not satisfy the rule, apart from the narrow exceptions discussed below.
How counseling fits into a typical case
- An initial consultation with an attorney and a first pass at documents
- The credit counseling session and certificate
- The means test and preparation of schedules
- Filing the petition with the certificate attached
- The meeting of creditors with the trustee
- The debtor education course, then the discharge
Our step-by-step guide on how to file Chapter 7 bankruptcy in California describes each stage in more detail.
Couples filing together
In a joint case, each spouse needs a certificate. Many agencies let couples take the session together, but it is worth confirming that a separate certificate is issued in each spouse's name.
When The Somal Law Firm prepares a Chapter 7 or Chapter 13 case for clients in Pleasanton, Dublin, Livermore and across the East Bay, the certificate date is tracked alongside every other filing deadline so it does not lapse while documents are being gathered. Attorney Bob Somal, Esq. handles the full range of matters listed on our practice areas page.
Choosing an approved counseling provider
Only agencies on the U.S. Trustee Program's approved list count, and approval is granted by judicial district. The Department of Justice publishes the current list. A certificate from an agency that is not approved for California's districts will not meet the requirement.
Warning signs
- A provider that does not appear on the official list or will not confirm its approval
- Pressure to enroll in a debt management plan before a certificate will be issued
- Advice to move money, transfer property or stop paying certain bills before filing
Questions about what to do with assets or payments before filing belong with an attorney who can see the whole picture, not with a counseling agency.
What happens if credit counseling before bankruptcy is missed
If a petition is filed without the certificate and no exception applies, the court can dismiss the case. A dismissal can cause more trouble than it seems: if a new case is filed within a year, the automatic stay in the second case may be limited.
Exigent circumstances
A filer facing an emergency, such as an imminent foreclosure sale, who asked an approved agency for counseling but could not obtain it within seven days, can file a certification describing those circumstances. If the court accepts it, the counseling must still be completed, generally within 30 days after filing, and the court can extend that by up to 15 days for cause.
Permanent exemptions
The requirement does not apply to a person the court finds, after notice and a hearing, unable to complete it because of incapacity, disability or active military duty in a combat zone. These exceptions are narrow and must be established, not assumed.
The second course: debtor education
Credit counseling is not the only class. After filing, individual debtors must also complete a separate personal financial management course from an approved provider before a discharge can be entered. In Chapter 7, proof of completion is generally due within 60 days after the first date set for the meeting of creditors. In Chapter 13, it is due before the final plan payment. When the second certificate is missing, a case can be closed without a discharge, which defeats the purpose of filing.
Frequently asked questions
Is credit counseling required for Chapter 7 and Chapter 13?
Yes. The pre-filing requirement applies to individual debtors in both chapters. Business entities such as corporations and LLCs are not subject to it.
Does taking the session commit me to filing?
No. The session is a briefing, not a filing. Many people complete it and then decide, with an attorney's input, whether bankruptcy or another option fits their situation.
Can I complete the course online?
Yes, as long as the agency is approved to provide counseling by internet in your district. Agencies usually deliver the certificate electronically, and a copy is needed for the filing.
My certificate is older than 180 days. What now?
It no longer counts. The session needs to be taken again so that a current certificate can be filed with the petition.
To talk through your timeline, call (415) 754-0115 and schedule a free consultation with The Somal Law Firm. We will look at your debts, the deadlines that matter and where counseling fits, and explain what to expect at your first bankruptcy consultation. You can also write to us through our contact page.
Attorney Advertising. This article is general legal information for Bay Area residents, not legal advice, and does not create an attorney–client relationship. Every situation is different — please consult a licensed attorney about your specific circumstances.