Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, individuals hoping to file a petition in U.S. bankruptcy court now need to attend a credit counseling session from an agency approved by the Office of the U.S. Trustee prior to filing. They also will require another counseling

It typically is up to the Trustee's Office to recommend a specific credit counseling service for potential filers. The counseling can take place in person, over the phone, or online. According to the Federal Trade Commission, prebankruptcy counseling typically is a single session and costs an average of $50. You will get a written certificate to turn in to the bankruptcy court.

Bankruptcy-related credit counseling is not a trip to the woodshed, points out the Financial Planning Association, Denver, Colo. It is intended to help an individual reevaluate his or her spending and prepare for life after certain debts are discharged. The counselor should provide a personal financial assessment, a reasonable and manageable spending plan, a detailed action plan, and short- and long-term financial goals.

Credit counseling is a valuable service whether it is mandated before a bankruptcy filing or if you simply are trying to organize your finances. However, it might be wise to consult a financial planner specializing in debt and bankruptcy issues before you do anything--filing for bankruptcy should be done only as an absolute last resort because it will damage your credit rating for the next 10 years. In general, though, here are some important things to know and ask about credit counseling before making a move:

Consult various agencies about reliable credit counseling services in the community. If you are filing for bankruptcy, it generally is wise to go with the chosen consumer credit agencies recommended by the trustee, but you still should check them out. See which agencies your local media consults when talking about credit counseling, and check in with the Better Business Bureau to find out if it has obtained complaints on the agency.

Watch carefully for fees and expensive services. A reputable credit counseling agency should send you free information about its policies and activities without asking you at that point to provide any details about your situation. Check the range of services it offers--the best credit counseling agencies provide budget counseling and savings and debt management classes. The Federal Trade Commission says to avoid organizations that push for a debt management plan as the only option before they even get a chance to look over your detailed financial situation.

Know how staff is paid. Understanding compensation is important. if the agency's staff is paid based on the services it sells, go somewhere else--and if your bankruptcy trustee recommends that agency, let him or her know so that organization can be taken off the list.

Understand debt management plans and whether they are right for you. A debt management plan typically requires a person to deposit money each month with the credit counseling organization, and it pays an individual's debts in exchange for a lowering of fees and balances by lenders. Reputable consumer credit services offer such plans, but since you might be in one for more than two years, you need to understand how they work.

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Understand that these organizations can make costly mistakes, If you reach an arrangement to pay future bills through an agency, it is possible they can make a mistake paying your bills on time. You still must monitor due dates on all of your outstanding bills and make sure the agency has made the payments on time. If it does not, call the Better Business Bureau. A credit counseling agency that fails to pay bills on time will delay any recovery of your credit rating.

Make sure all agreements are in writing. You should know in writing what services the agency will provide and whether you will attend classes and counseling on specific topics. Always be aware whether you will have the opportunity to discuss your situation with a counselor in person. Above all else, understand any and all charges.