One of the most confusing things about filing bankruptcy comes when your attorney’s office calls to remind you to take your classes. What classes? That’s the most common response I got from clients when I had to make that phone call. Then came the dreaded “what if I don’t pass?” Allow me to put your mind at ease and tell you a little bit about the classes required of anyone filing personal bankruptcy.
In 2005 Congress passed new legislation known as the Bankruptcy Abuse Prevention & Consumer Protection Act, otherwise known as BAPCPA. It was the largest overhaul to the bankruptcy code in several decades and it created the requirement for certain classes. Section 109(h) states that a debtor will not be eligible to file Chapter 7 or Chapter 13 bankruptcy unless within 6 months prior to filing the debtor received an “individual or group briefing” from an approved credit counseling agency. The law also required that all debtors complete an “instructional course concerning personal financial management” soon after their case has been filed.
Both courses are available to be completed online, over the phone, or in person and take somewhere between 1-2 hours. Neither course is pass or fail, but rather just for completion. These courses typically cost between $30-$50 apiece and that amount may or may not be included in the fees you pay your attorney. Here’s a bit more information about both:
- Credit Counseling Course – The credit counseling course should be taken before your bankruptcy paperwork is filed with the court. In fact, if your case is filed without your certificate of completion it could be thrown out altogether. It is imperative that you take the course as soon as you can after you attorney tells you it is available so that your filing is not slowed down.
- Debtor Education Course – This course is taken after your case has been filed with the court, but before it has been finalized and completed. That means you will have a smaller window of time to complete this course. In most cases bankruptcy attorneys recommend that you take this course before your bankruptcy hearing which is typically scheduled for 30 days after your case is filed.
These courses were made mandatory by the BAPCPA in order to prevent bankruptcy abuse from taking place, or in other words to make it a bit more difficult to file. The law was not created to keep those who really need bankruptcy from filing – it was created to prevent those individuals who habitually file from taking advantage of the system. Be sure and discuss these 2 courses with your bankruptcy attorney so that you are prepared when it is time to take them.