The bankruptcy reform legislation enacted in 2005 requires bankruptcy debtors to complete a personal financial management course. The debtor must file a certificate of course completion with the bankruptcy court before an order of discharge can be entered. This class averages about two hours in length and instructs the debtor on issues such as developing a budget, money management, and use of credit.
Many bankruptcy debtors initially resent this course requirement. However, most debtors report that they learn useful information and consider the course worthwhile. That is not surprising as most personal financial management studies indicate that our nation suffers from financial illiteracy. For example, a 2009 survey of 1,000 adults by the National Foundation for Credit Counseling found that:
- 41 percent graded themselves C, D, or F on their knowledge of personal finance;
- 42 percent surveyed kept close track of their spending;
- 64 percent have not ordered a copy of their free credit report in the past year;
- 33 percent do not contribute towards their retirement
Financial illiteracy can be a major contributor to personal financial failure. Some debtors have become overwhelmed by debt because they lack the tools for effectively managing their personal finances. The Personal Financial Management Course required by the bankruptcy laws is an opportunity for debtors to learn some basic management techniques. The aim is to educate the debtor to adopt a more disciplined and deliberate approach in managing household finances.
The opportunity for a fresh start after bankruptcy means much more when you have a plan for your future financial success. If you are struggling with debt, speak to an experienced bankruptcy attorney and make the choice to get control over your personal finances.