Frequently Asked Questions (FAQs) – Credit Counseling

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Q: Must all individuals obtain credit counseling prior to filing a chapter 7, chapter 11, chapter 12, or chapter 13 bankruptcy?

A: Yes. All individuals who file for bankruptcy must obtain credit counseling, including those with primarily business debts. (11 U.S.C. § 109(h)).

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Q: Can the United States Trustee Program (USTP) help me find a credit counseling agency or recommend an agency? – NEW

A: To assist individuals in finding a credit counseling agency, the USTP maintains a list of approved agencies on its website. The USTP cannot endorse or recommend any particular agency on its list of approved agencies, or guarantee the quality of its pre-bankruptcy counseling or services.

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

A: Visit the USTP’s list of approved agencies and scroll down to the section entitled “Approved Agencies Offering Services in Languages Other than English and Spanish.” Select the language from the pull down menu.

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Q: Can I complete my debtor education and credit counseling requirements in the same session?

A: No, the Bankruptcy Code requires individuals to complete credit counseling before filing for bankruptcy, subject to certain exceptions, and requires debtor education to be completed after the bankruptcy case is filed. Therefore, an approved agency may not offer both services to clients in the same session.

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

A: No. Joint filers may attend the same counseling session. The agency must provide personalized counseling to each individual and must issue a separate certificate to each individual.

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Q: If my credit counseling agency does not offer debt repayment plans (DRPs, also known as debt management plans, or DMPs), may I still enter into a DRP/DMP? – NEW

A: Yes. If the approved agency you initially visited does not offer DRPs or DMPs, it may refer you to another USTP approved credit counseling agency. The new agency may charge you additional fees; the referring agency must disclose this fact to you.

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Q: May a person other than the client (such as the client’s attorney) make payment for credit counseling?

A: Yes. Persons other than the client may pay for credit counseling, as long as such payments are reasonable and comply with applicable laws, regulations, and ethical requirements (such as state laws and rules concerning attorney ethics). The agency shall disclose to the client the fee charged and paid for the counseling session. Such payments shall not adversely affect the quality of the services rendered.

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Q: May a credit counseling agency charge a separate fee for issuing the credit counseling certificate?

A: Yes. An agency must disclose clearly all fees that it charges for counseling, including any separate fee for the issuance of a certificate, before providing any information to or obtaining any information from a client, and before beginning a counseling session.

Also, an agency must always provide counseling services, including issuance of the certificate, without regard to a client’s ability to pay.  See “What if I cannot afford to pay for credit counseling?” below.

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Q: What if I cannot afford to pay for credit counseling? – REVISED

A: An agency must inform clients that services are available for free or at a reduced rate, based on a client’s ability to pay, before providing any information to or obtaining any information from a client, and before beginning a counseling session.

Fee waiver policies may vary by agency. At a minimum, however, a client whose household income is less than 150 percent of the poverty level is presumptively entitled to a fee waiver or fee reduction.

The poverty level is defined by the poverty guidelines updated periodically in the Federal Register by the U.S. Department of Health and Human Services under the authority of 42 U.S.C. § 9902(2).

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Q: What if I have lost my certificate or it contains an error?

A: Please contact the credit counseling agency that issued your certificate to obtain a replacement or corrected certificate.

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Q: What is the effective date of the new final rule?

A: The final rule became effective on April 15, 2013.

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Q: How does the credit counseling final rule differ from the credit counseling provisions of the Interim Final Rule?

A: The final rule is significantly different from the Interim Final Rule. Below is a list of some of the major changes (all references are to the Code of Federal Regulations, title 28):

• Adds a definition of “criminal background check” to mean agencies must obtain background checks for each state in which a counselor has resided or worked during the preceding five years (§ 58.12(b)(14)).
• Adds a definition of “limited English proficiency” to mean the language proficiency of individuals who do not speak English as their primary language or have a limited ability to read, write, speak, or understand English (§ 58.12(b)(26)).
• Requires agencies to obtain advance consent from the USTP before implementing certain changes, such as changes in the approved agency’s counseling services (§ 58.18(a)(6)), engaging an independent contractor to provide counseling services and/or granting a contractor access to, possession of, or control over client funds (§ 58.18(a)(2)).
• Makes more explicit the prohibition against referral fees Agencies may not enter into referral agreements (in form or substance) except for payments under a fair share agreement (§ 58.20(d)(4)).
• Requires agencies who offer counseling by telephone or Internet to meet specific identity verification requirements. Additionally specifies that agencies shall not provide diminished counseling services because any part of the counseling is delivered by telephone or Internet (§ 58.20(h)(1) & (2)).
• Requires agencies to make additional mandatory disclosures, such as fees associated with the generation of the credit counseling certificate (§ 58.20(l)(1)), and whether the agency will negotiate an alternative payment schedule with creditors regarding unsecured consumer debt as provided in 11 U.S.C. § 502(k) (§ 58.20(l)(9)).
• Eliminates the requirement that agencies provide original signatures on certificates in recognition of electronic filing in the bankruptcy courts and the technology used to generate certificates (§ 58.20(o) and § 58.22(l)(2)).
• Adds specific recordkeeping requirements (§ 58.20(o)).
• Establishes a presumptively reasonable counseling fee of $50 per client (§ 58.21(a)).
• Creates a rebuttable presumption that a client lacks the ability to pay the counseling fee if the client’s current household income is less than 150 percent of the poverty guidelines for a household or family of the size involved in the fee determination (§ 58.21(b)(1)). The poverty guidelines are updated periodically in the Federal Register by the U.S. Department of Health and Human Services under the authority of 42 U.S.C. § 9902(2).
• Requires the USTP to review the basis for the mandatory fee waiver policy one year after the effective date of the rule, and then periodically, but not less frequently than every four years (§ 58.21(b)(2)).
• Requires agencies who publish information concerning their fees on the Internet to include their policies enabling clients to obtain counseling for free or at reduced rates based upon the client’s ability to pay (§ 58.20(l)(2)).
• Permits clients to verbally request agencies to send their certificates to their attorneys (§ 58.22(a)).
• Specifies that Internet and automated telephone counseling are not complete until the client has engaged in interaction with a counselor following the automated portion of the counseling (§ 58.22(a)).
• Requires certificates to be issued within one business day after counseling is completed (§ 58.22(c)). The certificate shall bear the agency’s incorporated name and shall identify the judicial district the client requests, the delivery method, the date of counseling, the counselor’s name, and the client’s full name (§ 58.22(m)-(o)).
• Requires certificates to be issued only in the form approved by the USTP using the Certificate Generating System maintained by the USTP (§ 58.22(e)).
• Clarifies surety bond computation methods for agencies and independent contractors (§ 58.23).

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2. Application Process

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Q: What is the deadline for submitting an application? – REVISED

A: There is no deadline for new applicants. However, a currently approved agency must re-apply no later than 45 days before its current approval period expires, unless the USTP grants a written extension.

An agency must be ready to provide services by all requested methods of delivery (i.e., in-person, telephone, or Internet) immediately upon approval. If an approved agency is not prepared to provide services by all requested methods of delivery, it must inform the USTP during the application review process.

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Q: What is the application review process? – NEW

A: Upon receipt of a complete application package, the USTP will send an acknowledgment email to the applicant. A financial analyst will then review the application and will contact the applicant if more information is required.

To ensure adequate and prompt review, applicants should follow the application instructions closely, answer every question completely, provide up-to-date information, and provide all relevant responses and documents.

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Q: Will the USTP accept applications by electronic mail or facsimile? – NEW

A: The USTP accepts applications by electronic mail as well as by U.S. Postal Service mail or other shipping/delivery services, but not by facsimile. Applications can be completed using a fillable PDF form. Please see the Instructions for Application for Approval as a Nonprofit Budget and Credit Counseling Agency, available on the USTP’s Web site, for further directions concerning application procedures.

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Q: If I am currently approved, can I continue to provide credit counseling even if my application for re-approval is under consideration and more than one year has elapsed since my current approval was granted? – NEW

A: Yes, provided that your application for re-approval was submitted timely, meaning forty-five to sixty days before the expiration of your current approval, or you have received written USTP consent to an extension of time to apply.

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Q: For agencies proposing to offer DMPs or DRPs, what documentation of bonding and insurance must be submitted with the application?

A: The original surety bonds and/or proof of adequate fidelity insurance should be submitted with the application.

If the required original surety bonds and/or proof of adequate fidelity insurance are not readily available, you still may submit your application with a copy of the bond and/or insurance policy for preliminary review. Final approval of your application is subject to submission of the original surety bond and/or proof of adequate employee bonding or fidelity insurance.

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Q: May an attorney apply to be an approved credit counseling agency?

A: Attorneys may be approved as credit counseling agencies provided they meet the requirements set forth in 11 U.S.C. § 111, the final rule, and state laws concerning organization and operation as a nonprofit entity. State statutes, ethics rules or codes, rules of court, or other factors may limit an attorney’s ability to provide these services or restrict the manner in which services are rendered.

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Q: Once a credit counseling agency is approved by the USTP, does the agency need to remain compliant with state laws, such as state laws governing licensing, permits, bonding, etc. ?

A: Yes. An approved agency must comply with all applicable state laws to remain as an approved agency in that state.

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Q: If applying for a limited number of judicial districts now, may an agency obtain approval for additional districts later? – REVISED

A: Yes. A credit counseling agency, once approved, may request approval for additional judicial districts by submitting an amended application. The amended application shall list both the additional judicial districts for which approval is being requested, as well as the currently approved districts. See “May a credit counseling agency change the services it provides?” below for complete procedures.

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Q: May a credit counseling agency change its fee structure after approval of its application? – REVISED

A: A credit counseling agency may not increase its fees without prior USTP approval. To request approval to increase fees, an agency must submit an amended application setting forth the proposed increased fees, as well as the reason for the increase. See “May a credit counseling agency change the services it provides?” below for complete procedures. An agency may decrease fees without prior USTP approval.

A fee of less than or equal to $50 is presumed reasonable and does not require justification. Fees in excess of $50 must be approved in advance by the USTP by demonstrating, at a minimum, that the agency’s costs for delivering the counseling services justify the requested fee. The agency bears the burden of establishing that its proposed fee is reasonable.

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Q: May a credit counseling agency change the services it provides after approval of its application? – NEW

A: An agency must obtain advance approval from the USTP before making any material change to its credit counseling services by submitting an amended application. The following material changes require advance approval:

• Cancellation or change in the amount of the surety bond;
• Cancellation or change in the amount of the employee fidelity bond or insurance;
• Engagement of an independent contractor to provide counseling services, or to administer DMPs or DRPs, or to otherwise control or account for client funds;
• Fee increases;
• Changes in the agency’s fee waiver or fee reduction policy;
• Expansion into additional judicial districts;
• Change in the counseling method of delivery (i.e., in-person, telephone, or Internet), whether adding or subtracting; or
• Changes to the counseling materials or counseling script.

To amend the application, complete only the relevant portions of the application form, including a newly executed Certification and Signature (Section 9 of the application) and any relevant appendices, and submit all documents to USTP by electronic mail, U.S. Postal Service mail, or other shipping/delivery service.

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Q: How long should a typical counseling session last? – NEW

A: The USTP understands that counseling sessions may vary in length depending on each client’s particular circumstance. Generally, however, counseling sessions should last approximately 60 minutes.

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Q: When is Internet or automated telephone counseling considered “complete”? – NEW

A: An agency must provide substantive, personalized budget and credit counseling consistent with the requirements in 11 U.S.C. § 111(c)(2)(E) during the counseling session as a whole. The agency must provide:

• an analysis of the client’s current financial situation;
• a discussion of the factors that contributed to the client’s specific financial situation; and
• a plan to address the client’s financial situation without incurring negative amortization of debt.

Internet and automated telephone counseling is complete only after the client has engaged in “live” interaction with a counselor following the Internet or automated telephone portion of the counseling. Such interaction may take place by:

• telephone;
• live chat; or
• email.

Agencies that conduct this mandatory interaction by live chat or email must retain tangible records sufficient to verify the content of the interaction, such as chat transcripts, recordings or transcribed recordings of telephone calls, and copies of emails.

An agency may not provide only generic advice concerning financial alternatives to the client. Rather, it shall ensure that the advice addresses the client’s specific financial circumstances. If the automated portion of the agency’s counseling does not thoroughly analyze the client’s individual financial circumstances, or provide a plan to assist the client in specific terms, the interaction between the human counselor and the client must do so.

An agency shall not provide any client diminished counseling services because the client receives any portion of those counseling services by telephone or Internet.

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Q: How must an agency verify that the individual receiving the counseling via the Internet or automated telephone is the actual client?

A: During the mandatory live interaction portion of counseling via the Internet or automated telephone, the agency must verify the client’s identity and ensure that the same person claiming to be the client completes the entire session. To verify the client’s identity, the agency shall:

• obtain one or more unique personal identifiers from the client and assign an individual access code, user ID, or password at the time of enrollment; and
• require the client to provide the appropriate access code, user ID, or password, and one or more of the unique personal identifiers during the course of delivery of the counseling services.

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

A: No. The client must decide on his or her own whether or when to file bankruptcy.

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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 English proficiency. Such accommodation may include providing services in the client's language, or referring the client to an approved agency that offers services in the language in which the client is proficient.

Individuals who have “limited English proficiency” are those who do not speak English as their primary language or have a limited ability to read, write, speak, or understand English.

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Q: May an approved credit counseling agency that is also an approved provider of a debtor education instructional course offer both services before a bankruptcy case is filed?

A: No. The Bankruptcy Code requires individuals to complete credit counseling before filing for bankruptcy, subject to certain exceptions, and requires debtor education to be completed after the bankruptcy case is filed. Therefore, an approved provider may not offer both services to clients in the same session.

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Q: Must a credit counseling agency provide separate counseling to individuals who intend to file a joint bankruptcy petition?

A: No. Joint filers may attend the same counseling session. The agency must provide personalized counseling to each individual and must issue a separate certificate to each individual.

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Q: What factors are to be considered in determining an individual’s “ability to pay”? – NEW

A:The ability to pay is based on the agency’s application of its particular fee waiver or fee reduction policy to the client’s personal financial situation. At a minimum, clients whose household income is less than 150 percent of the poverty level are presumptively entitled to a fee waiver or fee reduction, based on the client’s actual ability to pay. Ability to pay shall be determined based on income information the client submits in connection with counseling services.

An agency shall apply its stated fee waiver or fee reduction policy to the client’s personal financial situation. The poverty level is defined as the poverty guidelines updated periodically in the Federal Register by the U.S. Department of Health and Human Services under the authority of 42 U.S.C. § 9902(2).

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Q: When shall an agency disclose its fees and fee waiver and/or fee reduction policies to its clients? – NEW

A: An agency shall disclose its fees, as well as its fee waiver and/or fee reduction policy, to the client before providing any information to or obtaining any information from a client, and before beginning a counseling session.

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Q: Once approved by the USTP as a credit counseling agency, may the agency represent that the fee it charges is federally mandated or required by law or the Department of Justice?

A: No. An agency may not represent that its fees are federally mandated or required by law, or by the Department of Justice. Approved agencies must provide credit counseling services without regard to a client’s ability to pay and must inform clients that services are available for free or at a reduced rate, based on a client’s ability to pay, before providing any information to or obtaining any information from a client, and before beginning a counseling session.

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Q: What is considered a “reasonable fee”?

A: A fee of less than or equal to $50 is presumed reasonable. If an agency believes its operating costs require fees in excess of $50 per client, the agency may submit to the USTP its request to charge higher fees with supporting evidence. The USTP will consider the fees customarily charged in the industry for similar services when determining the reasonableness of a particular agency’s fees. The USTP also will consider other variables such as geographic location, the types of services the agency supplies, administrative costs, and alternate funding sources.

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Q: May a person other than the client (such as the client’s attorney) pay for the credit counseling?

A: Yes. Persons other than the client may pay for credit counseling, as long as such payments comply with applicable laws, regulations, and ethical requirements (such as state laws and rules concerning attorney ethics). The agency shall disclose to the client the fee actually charged and paid on the client's behalf for the counseling session. Such payments shall not adversely affect the quality of the services rendered.

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Q: May a credit counseling agency refer a client to another agency for the purposes of a DRP? – REVISED

A: Yes. An approved agency may refer a client who wants to enter into a DRP to another USTP-approved agency that offers a DRP. The referring agency must disclose any additional fees that may apply to the referral.

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Q: May a credit counseling agency use a third party to assist in the administration of a DRP? – REVISED

A: Yes. The third party must be: (a) a USTP approved credit counseling agency, or (b) a service provider that either is specifically covered by the agency’s surety bond, or has a surety bond in a sufficient amount to provide for the safekeeping of the agency’s client funds. Additionally, subject to limited exceptions, the third party must agree, in writing, to USTP oversight and audits.

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Q: May a credit counseling agency charge a separate fee for issuing the certificate that the client must file in bankruptcy?

A: Yes. An agency must, however, disclose clearly all fees that it charges for a counseling session, including any separate fee for the issuance of a certificate, before providing any information to or obtaining any information from a client, and before beginning a counseling session.

An agency must always provide counseling services, including issuance of the certificate, without regard to a client’s ability to pay.

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Q: May a credit counseling agency’s “d/b/a” appear on the credit counseling certificate?

A: A certificate may be issued only under the name of the approved agency as it appears on the USTP Web site. This requirement assists the USTP in ensuring that only approved agencies issue certificates.

An agency may request that the USTP list both its legal name and its d/b/a on the USTP Web site, e.g., ABC Counseling Inc., d/b/a XYZ Counseling Services. Both names will appear on the USTP Web site and the credit counseling certificates.

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Q: May a credit counseling agency issue blocks of certificates to attorneys or third parties?

A: No. Certificates shall be issued to each client as each client completes a counseling session. See also “May a credit counseling agency issue certificates before counseling is complete?” below.

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Q: May a credit counseling agency issue certificates before counseling is complete? – NEW

A: No. Certificates shall be issued to each client only after the client has completed the counseling session.

Advance certificate issuance is improper and jeopardizes the integrity of the counseling process. Such conduct may result in revocation of an agency’s approval to provide counseling in any district.

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Q: May a credit counseling agency email a completed certificate of counseling directly to the client or the client's attorney, or provide it for uploading on the agency's Web site?

A: Yes. The agency may email a completed certificate directly to the client or the client's attorney, or make it available for uploading from a client account on the agency’s Web site.

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Q: What if a client loses the certificate?

A: Lost certificates should be reprinted. To reprint a lost certificate:

• Search the CGS database by the certificate ID number.
• Input the client’s name, as it appeared on the original certificate, in the client name field.
• Select “Save for Reprint” and then “Create Certificate.”
• At the next screen, select “Reprint Certificate.”
• The CGS will generate a reprinted certificate, and the CGS database will note that the new certificate is a reprint and bear the original certificate ID number. All of the information that was on the original certificate remains without alteration, the only difference being the word “DUPLICATE” across the document. A certificate can be reprinted in this manner more than once.

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Q: What if the certificate contains an error?

A: If the original certificate contains erroneous information (such as a misspelled name or incorrect judicial district), cancel the original certificate and issue a new certificate.

• Prepare a new certificate that includes the original date and time of credit counseling, information concerning debt management plans (DMPs) if applicable, the method of delivery, and name and title of the original issuer.
• Include the client’s correct name and correct judicial district.
• The CGS automatically will insert the date of the new certificate.
• When printed, the certificate of completion should contain the same information as the cancelled certificate, except for the corrected name or district (as applicable) and the new certificate issue date.

To cancel the original certificate:

• Search for the certificate by issue date, ID number, or issuer name.
• Select “VIEW” and manually cancel the incorrect certificate by choosing “Cancel a Certificate” in the upper left hand red banner on the screen.
• Insert the certificate number to be cancelled and select “Continue.”
• Select “Yes, Cancel Certificate” to confirm the cancellation.

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Q: I need to reprint a certificate for a client, but I issued the certificate during my agency’s prior approval period and am unable to reprint it now. What should I do?

A: If the client completed counseling within the last 180 days, you may e mail a request for assistance to ust.cc.help@usdoj.gov. Requests for assistance received outside ordinary business hours (9:00 a.m. to 5:00 p.m., Eastern Time, Monday through Friday, excluding holidays) will receive a response the next business day.

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Q: I am the agency’s CGS administrator and have forgotten the administrator password. How can I obtain or reset my administrator password?

A: Please email ust.cc.help@usdoj.gov or contact the Credit Counseling and Debtor Education Help Line, (202) 514-4100, between 8:00 a.m. and 5:00 p.m., Eastern Time, Monday through Friday, excluding holidays) for assistance. Requests for assistance outside ordinary business hours generally will receive a response the next business day.

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Q: I have forgotten a user password for CGS. How can I obtain or reset a user password?

A: The agency’s CGS administrator, not the USTP, should be contacted to reset a user password. To reset the password:

• From the CGS Home Screen, the agency’s CGS administrator selects the Agency Accounts tab. The Agency Accounts - View Accounts screen will appear.
• Locate the relevant user account and click Reset Pwd. The “Reset a User Password” screen will appear.
• Type in a new password and confirm.
• Provide the user the new password. Inform the user that, at the next login, he or she will need to change the password to one of his or her own selection.

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Q: I am locked out of CGS - that is, I have received the “User Account Disabled” notification. How do I regain access?

A: If a CGS user tries to log in using the wrong password three times, CGS will disable the account and prohibit the user from logging in. If you receive this notification, contact your agency’s CGS administrator, not the USTP, and request that he or she reset your user password.

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Q: How long must an agency maintain its records?

A: Agencies shall maintain records for a minimum of two years to enable the USTP to evaluate whether the agency is providing effective counseling and acting in compliance with applicable laws and regulations. All records shall be maintained in either hard copy form or electronically in a format widely available commercially.

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Q: When must an agency file the credit counseling activity report (Appendix E to the application)?

A: The reporting periods are January 1 - June 30 and July 1 - December 31 of each year. An activity report must be submitted within fifteen days of the end of each reporting period.

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Q: Our agency also is approved to provide a debtor education instructional course and currently submits the debtor education activity report (Appendix E to the application) twice a year as well. May we report both the credit counseling and debtor education data on the same form?

A: No. You must report credit counseling data and debtor education data on separate forms. You may, however, submit both forms to the USTP at the same time.

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Q: What does the term “number of other new clients counseled this reporting period” mean?

A: This term refers to all other clients counseled by your agency during the same reporting period who were not pre-bankruptcy clients.