In 2005, the Bankruptcy Code was rewritten, and included in the changes was a requirement that debtors take two courses related to financial management. The first course is on the topic of credit counseling. This course helps the student analyze their financial situation and consider their options for reducing and/or eliminating their debt. Almost all bankruptcy filers are required to take this course before filing bankruptcy. Upon completion of the course a certificate is issued by the credit counselor, and this certificate must be filed with the bankruptcy court to prove that the course was completed. The certificates are good for 180 days and if you delay filing bankruptcy for longer than 180 days the course must be taken again.
The second course is on the topic of debtor education. This course teaches the student how to create and follow a budget, use credit wisely, and provides a general education on how to manage finances. This course must be taken after the bankruptcy case is filed but before discharge. Upon completion of the course the counselor will once again issue a certificate that must be filed with the court. If the course is not completed the bankruptcy case will eventually be closed without the debtor receiving a discharge. This is bad, because for most debtors the whole point of the bankruptcy case is to receive a discharge and eliminate their debt. The case can usually be reopened so that a certificate of completion can be filed, but this process requires a costly filing fee with the court and additional attorney’s fees, so it is best to finish this course early to avoid these problems.
Counselors offer these courses online or on the telephone. There is a cost associated with the courses but most providers are non-profit agencies and the courses are inexpensive. Counselors must be approved by the Office of the United States Trustee in order to offer counseling for bankruptcy cases. Debtors should contact this governmental agency before choosing a course provider to ensure that the certificate issued by the counselor will satisfy the requirement in the district in which the case will be filed. Finally, these two courses offer a lot of useful information if they are approached with the right attitude. When taking the courses, don’t worry so much about getting the exact numbers correct. These courses aren’t math tests. Instead, focus on the lesson they are trying to teach you how to apply them to your financial situation.