Bankruptcy: Credit Counseling & Debtor Education
If you are considering bankruptcy, you should be aware of the credit counseling and debtor education requirements of the Bankruptcy Code. These requirements were added to the Code in 2005. Their purpose was to help individuals determine if there were any meaningful alternatives before filing bankruptcy.
Who Must Comply?
All individual debtors (including jointly filing spouses) must comply with these requirements. Legal entities (corporation, llc, etc.) are exempt.
What is Required?
Two separate classes. Pre-filing credit counseling and post filing debtor education.
Credit Counseling Class
Within 180 days before filing, you must take a credit counseling course approved by the U.S. Trustee Program. A list of approved providers in the Western District of Oklahoma can be found here. Many providers offer online and/or telephone counseling.
The session normally lasts 60 to 90 minutes and includes an evaluation of your financial situation, a budget plan, and alternatives to bankruptcy. The provider may prepare a proposed repayment plan for your debts. While you must participate in the counseling, you are not required to accept the proposed plan. You should note, however, that if such a plan is prepared, it much accompany your other bankruptcy documents at the time of filing. If the proposed plan clearly shows that you have the ability to repay your debts, this could serve as a basis for the court to question why you filed a Chapter 7 instead of a Chapter 13.
Once your session is concluded, you will receive a certificate of completion. This document must accompany your bankruptcy petition at the time your case is filed.
Debtor Education Class
In a Chapter 7 case, you must take the debtor education class within 45 days of the date first scheduled for your meeting of creditors. In a Chapter 13 case, you must take the debtor education class no later than the date you make your last plan payment. However, it can be taken earlier. A list of approved providers in the Western District of Oklahoma can be found here.
Unlike the credit counseling class, this class is about financial management going forward. This serves as an effort to prevent you from the financial pitfalls which led to bankruptcy.
Once your session is concluded, you will receive a certificate of completion which must be filed, along with a certification by you that you have taken the course.
If you have questions about these requirements, or otherwise wish to discuss your financial options, we are here to help!
(We are a debt relief agency and we help people file for bankruptcy relief under the Bankruptcy Code.)