The new bankruptcy law of 2005 (BAPCPA) requires that everyone filing Chapter 7 or Chapter 13 bankruptcy must complete a Credit Counseling class AND a Personal Financial Management/Debtor Education class. Why two different classes? Well, the Credit Counseling class focuses on your existing debts whereas the Personal Financial Management class attempts to teach you how to budget and responsibly manage your finances for the future.
The Credit Counseling class must be taken before you file bankruptcy while the Personal Financial Management class is taken after you file bankruptcy. Even though taken at different times, you may take both classes from the same provider. Just make sure that the provider is a non-profit budget and credit counseling agency that has been approved by the Department of Justice’s United States Trustee Program.
Upon completion of each class, you will receive a Certificate of Completion. You must provide proof of course completion to the bankruptcy court in order to avoid dire consequences.
If you fail to provide the bankruptcy court with a copy of your Credit Counseling Certificate of Completion, your newly filed bankruptcy case will be summarily dismissed. You can always refile, but that costs more money and wastes time.
Worse yet is what happens if you fail to provide proof that you completed the Personal Financial Management class. Then your bankruptcy case being closed without a discharge order being issued to you. This would be terrible because the discharge order is why you filed bankruptcy to begin with. It’s the discharge order that releases you from personal liability for certain types of debts. In other words, obtaining a discharge means that you are no longer legally required to pay the debts that are discharged. Therefore, your creditors can no longer take any action against you to collect those debts. No letters. No phone calls. No lawsuits. No garnishments. But, if you do not receive a discharge because you failed to provide proof of having completed the Personal Financial Management class, you will still owe each and every one of your debts. And believe you me, your creditors will come back after you with a vengeance.
So in conclusion, be sure to take the two required classes at the right time and then follow up by providing proof to the court that you completed both courses. A service that I offer to my clients is assistance in both scheduling these two classes and providing the appropriate notification to the court.
If you’re struggling with debt problems and would like to know more about how bankruptcy may be able to help you, contact me today to schedule a FREE initial consultation. Just fill out the Contact Dan form on the far right side of the page and click the Submit button and I’ll get back with you as quickly as I can. I would count it a privilege to be able to visit with you in a relaxed and confidential environment where I’ll answer all of your questions in plain English and give you the straight scoop on the pros and cons of bankruptcy as related to your specific situation.