This article is part of my bankruptcy alphabet series

Following the alphabet motif here, I am now on the letter “C”.   One of the relatively new bankruptcy-related “C” words is “credit counseling”.  OK, that’s two words, but for cases filed after October 2005,  it is now a prerequisite for any individuals filing a bankruptcy case.   Debtors must take a credit counseling course within 6 months prior to commencing any bankruptcy case under Chapter 7, chapter 11 or chapter 13.

Can I Get The Credit Counseling Done Anywhere?

No. The credit counseling course must be taken from an agency approved by the Office of the United States Trustee

What Happens if I Don’t Take the Course?

Taking the course is a prerequisite for being eligible to be a debtor in the Chapter that is filed.  Failure to file the required certificate of completion showing the course was taken prior to filing your case  is grounds for dismissal of the case.   However, some judges will allow the course to be taken after the case is filed.

Financial Management Course–Another Course?

Yes, Congress in its infinite wisdom decided to require individuals to take a post-filing course in debt (financial) management, and file that certificate as a prerequisite to obtaining a discharge.  If the certificate of completion for this course is not filed within required timeframes (different with each chapter), the case will be closed without discharge being entered.

The above are just a couple of the many intricacies of a successful bankruptcy case in today’s world and highlight the need for experienced representation by a qualified bankruptcy attorney.

Other Articles on the letter “C” in bankruptcy:

Creditors in bankruptcy:  by, Jay Fleischman

C Is For Counseling by, Cathy Moran

and also,

• Cate Eranthe says C Is For Chapter 7
• David Axinn claims that C Is For Credit Union
• Ryan Caldwell thinks C is for Conversion
• Bill Balena thinks C is for Cosigner
• Christopher C. Carr thinks C is for Compassion and Competence
• Stuart Ing thinks C is for Cramdown
• Kim Coleman asserts C is for Creditors Meeting
• Jenna Cho finds C is for Cars
• Mitchell Goldstein sees C is for Cramdown
• Dorota T thinks C is for Costs
• Lewis Roberts believes C is for Chapter Choice
• Christine Wilton explains why C is for Congress
• Chris McAvoy discusses Chapter of Relief
• Monica Shepard analyzes collection agencies
• Bob Doig explains cramdowns
• Bret Nason discusses credit card tips
• Kyle Lindsay on Credit Counseling  and Daniel Winter on Credit Counseling
• St. Clair Shores attorney on Creditors
• Peter Behrmann says C is for Creditors
• Nancy Martin says C is for Claims
• Birmingham Bankruptcy thinks C is for Credit Counseling
• Athena Inembolidis believes that  C is for Check your Bills

Image courtesy of Alan Cleaver_2000

Oh No!

For bankruptcy cases filed after October 2005  individuals must,  after filing their case,  take a  Financial Management Course and file Official Form 23 along with the certificate of completion to receive a discharge in any bankruptcy case.  The financial management (sometimes also referred to as the debt management) course is different from the pre-filing credit counseling course which must be filed along with the initial bankruptcy petition.  These courses must be taken from an institution approved by the Office of the United States Trustee.

Many debtors who file bankruptcy cases without the assistance of a qualified bankruptcy attorney eventually receive a shocking notice in the mail which states:  “Case closed without discharge.  Debtor has not filed a Financial Management Course Certificate proving compliance with the required instructional course requirement for discharge.”  However, they’ve done everything else required of them except for taking the required financial management course and filing the required Form 23.   All that time and work, and no discharge?

YOU CAN FIX THIS:  IT’S NOT TOO LATE

Fortunately, there is usually a solution if this happens in your case.  Pursuant to 11 U.S.C. 350,  and Federal Rule of Bankruptcy Procedure  5010 you can file a motion to reopen your case and, if granted, take and file the required financial management course certificate. The best way to accomplish this is to hire a bankruptcy attorney for this purpose to make sure the facts of your case are presented properly and maximize your chances to have the Motion granted and to get your discharge entered.

There is a court mandated filing fee for the Motion to Reopen for the purpose of filing official form 23 (presently $260) and attorney’s fees vary, but this is not the time to skimp and save.  You have now discovered one of the reasons why you should have hired a bankruptcy attorney in the first place; now is the time to do so and obtain your discharge.

**If your case was filed in the Southern California Area and you need assistance, please click here and explain your situation.

Photo Credit:  Flickr

I write this to clarify misconceptions regarding the required credit counseling prerequisite to filing a bankruptcy case.

One of the requirements of the new bankruptcy law that went into effect in October 2005 is that all individual debtors filing a bankruptcy case must complete a credit counseling course by a certified company within six months prior to filing their bankruptcy case.

Recently I have received a number of comments from potential clients telling me that they were informed that they had to complete the credit counseling course, then wait six months before they can file their bankruptcy case. This is completely untrue.

The certificate for a completed credit counseling course is valid for 6 months. If for some reason you obtain a certificate and do not file your bankruptcy case (Chapter 7, Chapter 13 or Chapter 11) within 6 months, then you need to take the course again and obtain another certificate.

The course itself probably takes about an hour or so to complete. Many credit counseling agencies allow this to be done online.

There is another financial management course which Congress requires debtors to take AFTER the bankruptcy case is filed. This is a prerequisite to obtaining a discharge of debts. This financial management course (also called a debt management course) takes a similar amount of time as the credit counseling course to complete and can also be done online in many instances.