When the Bankruptcy Code was revamped in 2005 with The Bankruptcy Abuse Prevention and Consumer Protection Act, Congress added a provision that required consumers to participate in debtor education classes prior to filing bankruptcy. These classes were designed to accomplish several goals and initially frightened many individuals into rushing to file their bankruptcy petitions prior to the effective date of the law. Consumers and bankruptcy attorneys alike flooded the Bankruptcy Courts with thousands of petitions for bankruptcy relief to avoid this debtor education. It was feared that this new requirement was cumbersome and would over-burden the consumer who was desperate for bankruptcy relief. Many consumers even misunderstood and believed that they could not file bankruptcy or that the process was now so difficult they should not even attempt to file for bankruptcy relief. I am aware of this because I am a paralegal who works within this field and put in countless hours of overtime during the mad dash to file in the fall of 2005.
Even though filings did drop after the law went into affect, the 2005 legislation did not cause bankruptcy filings to stop completely. Moreover, the rumors about debtor education courses and classes being difficult, time consuming and over-burdensome are not true. Our clients have had no trouble obtaining their debtor education certifications and in fact, have commented that the process is not as difficult or time consuming as they had initially anticipated.
There are two steps that debtors must complete with regard to debtor education and credit counseling in order to file for bankruptcy relief and receive their bankruptcy discharge. (There may be limited and specific instances where these requirements are waived or modified and you should seek the advice of a bankruptcy attorney to determine if you qualify.) The first is your Credit Counseling Certificate – – debtors must have this certificate to file with their bankruptcy petition. Only agencies that have been certified by the Office of the U. S. Trustee are eligible to issue certificates accepted by the court. A list of Approved Credit Counseling Agencies is on the website for the U.S. Trustee Program. Each agency must disclose all fees up front but many of them offer online and telephone counseling to make the process quick and easy.
The second requirement is that debtors complete Debtor Education (personal financial management instruction course) prior to receiving a bankruptcy discharge. There are deadlines for completing this course that your attorney will review with you. These agencies provide courses in financial education and a certificate of completion that is then filed with the Bankruptcy Court. A list of the approved agencies for debtor education may be found on the website for the U.S. Trustee Program.
It is a myth that people cannot file for bankruptcy relief and that debtor education is too much of a hassle to be worth the trouble. The fact is that bankruptcy relief is available to debtors and debtor education has not hampered that relief.
NOTE: Information contained in this article is NOT legal advice and should not be relied upon as legal advice. This article was not written by an attorney. You should seek the advice of an attorney if you are contemplating bankruptcy.