Before you can file for Chapter 7 or Chapter 13 bankruptcy as an individual, consumer debtor, the Bankruptcy Code requires that you complete a budget and credit counseling session with an approved credit counseling service. Services are approved on a district by district basis. Before using a service, you should check the US Trustee website to confirm the service is an approved provider for your local bankruptcy court (see below). The session can be conducted by phone call. The credit counselor will review your debts, so a copy of your credit report will be helpful. The credit counselor will also review your monthly income and living expenses, so a recent paystub and a list of your monthly living expenses will also be helpful. Keep in mind, that the certificate that will be issued at the end of this session serves as sort of an admission ticket to the bankruptcy court. However, that certificate is only valid for 6 months.
Can pre-bankruptcy credit counseling be waived?
Yes. There is a procedure to request a temporary waiver of the credit counseling requirement if there is some emergency (such as a foreclosure) that requires an immediate filing of your bankruptcy petition, and there is not enough time to complete credit counseling beforehand. There is also a procedure to request a total waiver of the credit counseling requirement if the debtor is disabled in some way that he/she is unable to complete credit counseling.
When do I complete the financial management course?
In 2011, the Bankruptcy Code requires each bankruptcy debtor to complete a financial management course (2 hours of videos followed by questions) no later than 60 days after their meeting of creditors. This deadline normally falls about 3 months after the bankruptcy petition filing date. Most people complete their session online, but you can also request a book to be mailed to you. Check the US Trustee site to confirm the provider you use is authorized to issue certificates for this course in your jurisdiction.
Can the financial management course be waived?
Yes. Similar to the motion to waive pre-petition budget and credit counseling requirements, a disabled debtor may file a motion to waive the financial management course requirement. The Court, at its discretion, may grant the waiver.
What happens if I miss my deadline for the financial management course?
Failure to complete the financial management course by the deadline can result in your case being closed without a discharge. Notices will be mailed by the Court to all of your creditors, and they will be allowed to start collection action against you again. Closure without a discharge is not the same thing as a dismissal, however. It is not a determination that you are ineligible for relief under the Bankruptcy Code. It only means that you missed your deadline for credit counseling. You can still complete the course and file a motion to reopen, but should act quickly. The Court charges a $260 filing fee for such a motion.