Since 2005 Congress has required consumer debtors to attend a credit counseling class before they file. They also must attend a debtor education class after they file to get a discharge. Our office can easily prepare a petition with only income information. However, we cannot file the petition without the credit counseling certificate.
Both courses take about two hours to complete with each district approving their providers. The prices vary from about 10 dollars for the lowest cost services to about 50 dollars for the most expensive. If you are filing under emergency conditions, the more expensive providers provide certificates immediately.
Filing Late Bankruptcy Debtor Education and Credit Counseling Certificates
Some providers will issue certificates 24/7 and others are open only at limited times. For instance, bkcert.com is open 24/7 and answers on the second ring. Others may be located in countries like Pakistan and usually have communication issues outside their web-based software. That might get extremely inconvenient.
Again, the statute reads that if you don’t take the course before filing, then, the court must dismiss the case. Exigent circumstances such as a soldier serving in combat might excuse you from taking the class before filing. However, it’s quite rare to qualify for the exigent circumstance exemption.
The statute is just as unforgiving if you fail to take the second “Debtor Education” course. But, be aware that often debt management agencies operate credit counseling courses in hopes of talking clients out of filing bankruptcy. These agencies often attempt to hijack someone and instead, sell them on debt counseling. Unfortunately, debt counseling has a high failure rate, so don’t fall into that trap.
⎆ Courts dismiss bankruptcy cases for filing the credit counseling certificate late.
If you file the credit counseling certificate late the court must dismiss your case because there is little or no choice for the court. In 30 years I’ve not had one client qualify for the exigent circumstances. For your own research, you may refer to the exigent circumstances exemption or waiver in 11 USC § 109(h)(3)(B).
Usually, the court holds a hearing to allow the debtor to simply take the course after he files his bankruptcy petition. Therefore, no one really gets a waiver or exemption. Instead, you still have to take it later plus you must go to a hearing where unless you were actively winning the medal of honor in defense of your country, the judge will deny the request.
The consequence of not taking the class and getting your certificate before your filing is that the case gets dismissed. If you take the course before filing, but file the credit counseling certificate more than three days after the petition the case will probably still be dismissed. However, you might file a motion for relief from judgment or a motion to reinstate the petition and have the case reinstated if you were simply late in filing the certificate. Therefore, you can recover from filing the certificate late. But, it is definitely fatal to file the case without taking credit counseling first.
The case of Re Moore stated “[BAPCPA] requires debtors to receive credit counseling before they can be eligible for bankruptcy relief so that they will make an informed choice about bankruptcy, its alternatives, and consequences.” in re Moore, 359 B.R. 665, 673 (Bankr. E.D. Tenn. 2006). This 2005 piece of legislation makes it harder to file bankruptcy and forces consumers to produce documents while businesses are excused.
⎆ Debtor education certificates are a requirement for bankruptcy discharges.
The debtor education certificate is a requirement to obtain the discharge. But, if you only need to file a Chapter 13 to save your home you might not need the discharge. In other words, if your Chapter 13 repays 100% of your debts, you might not need to take or file the debtor education certificate. When you fail to file the Debtor Education certificate on time, you will have to pay the filing fee a second time and file motions to reopen the case.
This often costs $600 dollars which includes a $300 filing fee plus $300 or more in attorney fees. This is a huge incentive to file this as soon as you can immediately after your case files. Fortunately, almost all of the services conveniently and automatically file the debtor education certificate as soon as you complete the training.
Normally, the training takes two hours, and some services apply timing to the sections. So, if you read a section and complete it early, you look at a screen while the clock ticks away and time expires for that section.
When Congress made debtor education a requirement, one of the considerations was that the lack of financial education often causes bankruptcy. Interestingly, Congress ignores consumer bankruptcy cases when the primary causes are death, disability, and employment discharges.
However, Congress also indicates that financial education is a fundamental goal. The Congressional Record states, “‘personal finance curricula be developed for elementary and secondary education programs.” If we teach our children, early on, how to manage money, credit, and debt, they can become responsible workers, and heads of households.”
Resources for Bankruptcy
Louisville Kentucky Bankruptcy Forms
Credit Counseling to Meet Bankruptcy Requirements
File Bankruptcy Online in Louisville, Kentucky
Home Foreclosure after Chapter 13 Bankruptcy
Chapter 11 Business Bankruptcy Information
If you are thinking about filing bankruptcy, don’t delay because timing is crucial. I am here to help you. So, contact my office right away to start the conversation. Nick C. Thompson, Bankruptcy Lawyer: 502-625-0905.
