After the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005, consumers have a lot more hoops to jump through to file for bankruptcy. One of those hoops is the pre and post filing classes that are now mandatory.
Credit Counseling Course
If you want to file for bankruptcy, you first have to complete a credit counseling course within 180 days before filing your bankruptcy petition. The credit counseling course normally lasts between 1 to 2 hours, and can be completed either by phone, on-line, or in person. The class asks questions about your financial situation and provides different courses of action that may be available for you, including bankruptcy. Towards the end of the course you will speak with a counselor, either online, by phone, or in person. After you complete the class, you receive a certificate to prove you completed the course. You will need to file this certificate with the court with very few exceptions.
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The course providers need to be approved by the Department of Justice US Trustee Program, so you cannot just go to any course provider. You need to check to see if the provider you are using to take the course is approved by the US Trustees. The credit counseling courses range in price from Free to $50. If you are below the poverty level, a lot of the course providers provide fee waivers and offer the course for free.
If you have not taken the pre-filing course prior to filing your voluntary petition, the court will most likely dismiss your case. It does not matter if you take the course after your case is filed - the case will with very few exceptions still be dismissed, and you will need to re-file your voluntary petition, and pay another filing fee. There are, however, exceptions to this credit counseling course rule. One of the exceptions is that a waiver can be obtained if the judge determines, after a hearing, that the person filing the bankruptcy case cannot take the credit counseling course because of incapacity (such as a mental illness), disability (where the person filing the bankruptcy case is physically unable to take the course by phone, online, or in person), illness, or active military duty in a combat zone. Needless to say, not many people fall in these categories to obtain a waiver of the credit counseling course.
Another exception is the "exigent circumstances" situation, where it was impossible for a bankruptcy filer to take the course prior to filing the voluntary petition due to an emergency. This is not a waiver of the credit counseling requirement; rather, it is a postponement of the course requirement. You still need to take the class soon after you file your petition. Currently, many people file for bankruptcy to halt foreclosure proceedings, most likely filing the day before the foreclosure sale date. What many do not know is that even if it was an emergency, they need to prove that they had requested the credit counseling course and just did not have the opportunity to take the class yet.
Financial Management/Debtor Education Course
After filing a bankruptcy case, the financial management/debtor education course must be completed to receive a discharge. The financial management/debtor education course provides information on how to budget and manage money and using credit better in the future. Similar to the credit counseling course, you may take the course online, in person, or by phone. The fee for the financial management/debtor education course ranges between $9 to $50.
In a Chapter 7 case, the deadline to take the course is within 60 days after the first date set for the meeting of creditors. Failure to take the post-filing course during this period could result in the case being closed without a discharge. The main goal of most people filing a bankruptcy case is to obtain a discharge. If you do not take this second and final class, then you will have file for bankruptcy protection for nothing. If you wish take your financial management/debtor education course after your case is closed without a discharge, you will need to re-open your case to file the certificate, and court fee are necessary, both from court filing fees and additional attorney fees, if you have an attorney.
In a Chapter 13 case, you need to take the course prior to the discharge of your case, which normally lasts somewhere between 3 to 5 years. However, it is advisable to take the course in the beginning, because most people forget the last requirement of taking the course. You do not want to have made 5 years of Chapter 13 plan payments and not receive the discharge you worked so hard to obtain.
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