Bankruptcy is a complicated process and should never be attempted without the aid of an attorney. But even so, those who file for bankruptcy (commonly referred to as “Debtors”) are required to fulfill certain educational requirements themselves. These requirements are not intended to train the Debtor on how to conduct the legal process, but rather, they are meant to give Debtors the knowledge to understand their role in the process. There are basically two requirements that all Debtors must fulfill in order to complete their bankruptcy case:
First, since October 2005, Debtors have been required to complete a “credit counseling” session. The primary goal of the session is to organize the Debtor’s specific financial information in such a way that a trained counselor can provide feedback to the Debtor about their situation. For this reason, this requirement MUST be completed prior to a Debtor actually commencing the bankruptcy process. In fact, the bankruptcy attorney is generally required to file a completion certificate with the Court at the same time the bankruptcy case is filed; proving that the Debtor has actually met this requirement.
The session can be conducted online or over the phone and can usually be completed in about 90 minutes or less. There are numerous organizations that offer this service, and fees usually range from about $15 to $40 per person. However, Debtors should make sure that the session they intend to participate in is one that has been approved by the state or jurisdiction in which they intend to file the bankruptcy case. A list of those can be found at www.usdoj.gov/ust. The outcome of this process provides the Debtor with an analysis of his or her income and expenses and often times illustrates in “dollars” the Debtor’s financial dilemma.
The second requirement is often referred to as a “Debtor Education” course. This course cannot be commenced until the Debtor actually files the bankruptcy case. Although this course can also be taken online or over the phone, it is often taken in person and in conjunction with other requirements of the bankruptcy case. Since this course is designed to provide Debtors with specific information about their role in the bankruptcy process, it is often offered and conducted by the local Office of the Standing Chapter 13 Trustee. Most Trustees offer the course at no charge to the Debtor. Your bankruptcy attorney will advise you about the options available for this course in your particular area. In the alternative, most Trustees allow you to take the Debtor Education course online or over the phone as well. There is usually a fee for taking the course online or over the phone and it is usually offered by the same organizations that offer the credit counseling sessions. Fees for this course are typically a bit higher than the credit counseling sessions. The course typically takes 2-4 hours to complete, depending on whether it is an “in-person” or online course. Debtors are required to provide their bankruptcy attorneys with a certificate of completion for this course as well.
Failure to complete either of the above requirements can result in disastrous consequences for the Debtor. Failure to complete the credit counseling will likely result in the case either not getting filed at all or being dismissed almost immediately after being filed. Failure to complete the debtor education can result in the case being closed without having received a discharge of debts. Understanding and completing these requirements is a critical part of the bankruptcy process. For a free consultation, contact the attorneys at Fears Nachawati here or by calling the office at 1.866.705.7584.