The debtor must receive a Credit Counseling Briefing and budget analysis within six months prior to filing the bankruptcy case. The requirement permits the briefing to occur by telephone, in person or on the Internet.
The credit counseling agency is to be a nonprofit agency and approved by the U.S. Trustee. The charge is for the briefing to be reasonable and to be waived if the debtor is unable to pay. See a list of agencies approved by the U.S. Trustee for the District of Arizona.
The counseling is to analyze the client’s current financial condition, factors that caused such financial condition, and how such client can develop a plan to respond to the problems without incurring negative amortization of debt. The counseling agency is to disclose its funding sources, counselor qualifications, possible impact on credit reports of its credit counseling program and the costs of a credit counseling program.
The exceptions to the briefing requirement are:
- a debtor that provides a certification of exigent circumstances that require an immediate filing and that the debtor was unable to get the briefing within the prior five days,
- there is no qualified counseling agency within the court district, or
- the debtor is disabled or on active military service in a combat zone.
Courts interpreting these changes tend to define “exigent circumstances” extremely narrowly. For example, the fact that a homeowner facing a foreclosure with a 20-day notice contacted an attorney on the 20th day has been found not to be an exigent circumstance, as the debtor had 20 days to take the Credit Counseling Briefing. Also the courts are requiring extreme diligence within that five-day period. If the court does find exigent circumstances, the debtor is still required to get the briefing within 30 days of the filing.
The case of a debtor who does not get a timely Credit Counseling Briefing will be dismissed. The consequence of a dismissal can be severe. The case can not be reinstated, and if the debtor files a second case within a year, that debtor will have to prove entitlement to extend the automatic stay for more than thirty days against creditors.