In 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act. The Act requires that individuals filing for bankruptcy complete a credit counseling course prior to filing. It also requires a debtor education course after filing but prior to discharge.
Credit Counseling
Congress hoped that the credit counseling course would provide information that might help filers find alternative solutions to bankruptcy. The course focuses on income, expenses and debts to assess if you are able to pay off your debt by way of a repayment plan thus avoiding bankruptcy. You will want to have your financial information gathered as the credit counseling provider will require it to determine whether a repayment plan is feasible for you. It is good to remember that you are only required to attend and complete the course: you do not have to follow the credit counseling provider’s recommendations and repayment plan. Most often the course determines that you have no other option than bankruptcy.
The course is usually available online, by phone, or in-person and must be completed within 180 days prior to filing. If you take the course online or through an automated phone system you will be required to talk to a counselor over the phone, by live chat, or email after the course. They will provide you with a written budget analysis and recommendations based on your specific financial situation. Your course will not be complete until you talk to the counselor.
Debtor Education
Congress wanted to provide an educational class on money management to those who have filed for bankruptcy so they can gain tools and knowledge to help them avoid bankruptcy in the future. The course will focus on your financial life after bankruptcy and again you will want to have your financial information gathered as you will be creating a budget, learning best practices on using credit, creating a savings account for emergencies, and other money management tips.
This course is usually available online, by phone, or in-person. If you file a chapter 7 you will need to take the course within 60 days after your 341 meeting and if you file a chapter 13 you will need to take the course before your last payment. If you take the debtor education course online or through an automated phone system you will be required to take and pass a test after the course (70% or better is considered passing). If you take the course over the phone the test will be given in person or over the phone. If you took the course online then the test will be given by phone, email or live chat. Please note that you must take and pass the course before you receive the certificate of completion necessary to have your case discharged.
Additional Things to Know
Approved Provider
The US Trustee office has a list of approved providers. Be sure that you take your course with a US Trustee approved provider otherwise it will not qualify and you will have to take it again. Here is the list on the US Trustees web site:
www.justice.gov/ust/eo/bapcpa/ccde/cc_approved.htm
www.justice.gov/ust/eo/bapcpa/ccde/de_approved.htm
Certificate of Completion
You will need to get your certificate of completion from the provider in order to demonstrate that you have taken the course. Your attorney must ensure that you complete each course and file your certificates of completion with the bankruptcy court. You need to make sure your attorney has the credit counseling certificate of completion before you can file for bankruptcy and the debtor education certificate of completion before your case can be discharged. Often the provider will ask for your attorney’s name and contact information to send the certificates directly to them. But be sure you get copies as well.
Fee Waivers
You may be able to get a reduced cost or waive the fees of the courses.
The U.S. Trustee’s office has ruled that the fees for the courses must be $50 or less. However if your household income is 150% below the poverty line you are eligible for a fee waiver for the credit counseling course. A provider does have the ability to decide to reduce the fee based on the financial information provided in the course. Contact your course provider to see if you qualify for a reduced or waived course fee.
Attorney Referred Course Provider
If your attorney referred and paid for the course on your behalf, the U.S. Trustee requires the provider to list the amount they charged the attorney. This is to prevent any discrepancy between what the attorney paid for the course and what you paid the attorney for the course.
Exceptions to the Course Requirements
You may qualify for an exception to the course requirement, but this is rare.
Here are the exceptions:
- There is no course available in your district. This is rare since providers offer courses online and by phone.
- You have a disability or incapacity that makes it impossible to take the course.
- You are in active military duty in a military zone.
If you need to file bankruptcy immediately due to impeding legal action or you can’t get access to a course within 5 days of the request, an exception could be made. But you will have to complete credit counseling within 30 days of filing.
Our Partner
We have partnered with Second Bankruptcy Course to provide an affordable debtor education course for only $15. Second Bankruptcy Course is a dedicated to financial education through its U.S. Trustee-approved debtor education course that is available both online and by phone. Course are also available in both English and Spanish.
