Before a debtor can file for bankruptcy in San Diego he or she must receive credit counseling from an agency approved by the US Trustee's Office. This counseling must occur within the 6-month period before filing. During the session your counselor will go over the options available to you given your financial condition. Keep in mind, however, that many agencies consider it a victory if they steer clients away from bankruptcy and into a debt management plan. A debt management plan (or DMP) is a payment plan designed to allow you to gradually pay down your debt. It's similar in nature to a Chapter 13 repayment plan, but without the legal discharge at the completion of the plan. If you go this route you and your credit counselor will design a plan stipulating how much you'll pay each month. You'll send this amount to the agency, which will then distribute the proceeds to your creditors. Debt management plans can be a good option for some people, but are not appropriate if your debt load is too great or your income too low. Remember, some agencies have a vested interest in getting you to sign up for a DMP and avoid bankruptcy. So don't be cajoled into this option if it doesn't make sense in your case. For example, it doesn't make sense for you to consistently forego essential items in order to scrape up enough cash to make your monthly payment. You want to have a little wiggle room in your budget. And your total debt amount should figure into the equation as well. In general, I look for my clients to have at least $10,000 in debt before I recommend filing for bankruptcy. If you have less than $10,000 of debt than I think a DMP can be a good option. It's a good idea to speak with a bankruptcy attorney before signing up for credit counseling. One reason for this is that an attorney can give legal advice, while credit counselors cannot. Your attorney will be able to give you the lay of the land in terms of debt relief and lay out both your bankruptcy and non-bankruptcy options. Your attorney will be also able to provide you with a list of approved credit counselors in your area and help you find a good one. This last point is important, because simply appearing on the list of approved agencies is no guarantee that the agency is actually good. You can complete your credit counseling requirement in-person, over the phone, or online. Most people find the online courses the most convenient. After you complete the session you will be emailed your certificate, which you must have before you can file for bankruptcy. Most credit counseling sessions cost between $30 and $50. However, approved agencies must provide credit counseling even if a person cannot afford the fee. Thus, if you find the cost prohibitive, you can always ask the agency to reduce or waive the fee. Remember that bankruptcy should not necessarily be considered a last resort. For many debtors it really is the option that makes the most economic sense.
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