As part of the Chapter 7 bankruptcy experience, you will be required to take some classes. Here is all you need to know.
Chapter 7 Bankruptcy Classes
What Bankruptcy Classes are Mandatory to File a Chapter 7?
When Congress changed the Bankruptcy Code in 2005, lawmakers included a requirement for debtors to complete two bankruptcy courses as part of the bankruptcy process. The first course is a credit counseling course that should be completed before filing a bankruptcy petition. The second course is a debtor education course that cannot be completed until after the bankruptcy petition is filed.
Courses must be taken from companies approved by the U.S. Trustee’s office for the state in which the debtor resides. Companies offer courses in person, online, and by telephone. Both courses can be completed in 90 minutes to two hours and cost between $15 to $100 depending on the company. Most debtors can locate a company in their area that offers low-cost bankruptcy courses if they search the approved list provided by the U.S. Trustee’s office. In a few cases, a debtor might qualify for a waiver of the fee, but the debtor must meet very strict requirements for the waiver.
Many companies offer to email or fax certificates of completion directly to our Prescott bankruptcy law firm for your convenience. If you have additional questions about completing a bankruptcy course, contact our office to speak with a Prescott bankruptcy lawyer.
Pre-Bankruptcy Course — Credit Counseling
The credit counseling course must be completed before filing your bankruptcy case. You will receive a certificate of completion that must be filed within 15 days after filing your bankruptcy petition. It is best to file your certificate with your petition so that you do not risk your case being dismissed for failing to complete the course. Your certificate of completion is only valid for 180 days. If you do not file your case before this time, you must take the course again and obtain another certificate.
The purpose of credit counseling is to determine if there is another way to resolve your debt problem without filing for bankruptcy relief. In addition, the course covers alternatives to filing bankruptcy, such as a repayment plan and debt consolidation. If the agency believes you can resolve your debt problem without filing bankruptcy, it may issue a repayment plan. The repayment plan must be filed with your certificate. In most cases, the agency determines that bankruptcy is the only viable option. However, if you receive a repayment plan, that does not mean you cannot file a bankruptcy case.
Even if it is obvious that your only option to get out of debt is to file a Chapter 7 or Chapter 13 personal bankruptcy, you must still complete the course. The course is required for all individual debtors filing under Chapter 7 or Chapter 13. Married couples filing a joint bankruptcy may take the course together; however, each person must obtain and file a certificate in his or her name.
Some debtors may be exempt from obtaining credit counseling. You might be exempt if you can show the court that:
- You have a mental incapacity that prevents you from understanding counseling;
- A physical disability prevents you from attending counseling (now that counseling is available online and by telephone, this exception is usually not applicable); or,
- You are on active military duty in a combat zone.
If you have questions about the pre-bankruptcy course, our Prescott bankruptcy attorneys can help by answering your questions about credit counseling.
Post-Bankruptcy Course — Debtor Education
The second bankruptcy course required for individuals filing under Chapter 7 or Chapter 13 is the debtor education course. You cannot take this course before filing bankruptcy, but you must take it before the filing deadline or you will not receive your bankruptcy discharge.
Failing to take the second course and filing the certificate of completion before the deadline is costly. All the work you did to file a bankruptcy case and the money you paid to file is worthless because your discharge is denied, and you continue to owe your creditors as if your case was never filed. Therefore, it is wise to complete your debtor education course as soon as possible after your bankruptcy petition is filed so that you do not miss the deadline.
The purpose of the debtor education course is to provide information about personal financial management. Spouses filing a joint bankruptcy case can take the course together, but each spouse must obtain and file a certificate of completion in his or her name. Some of the topics that are covered in the debtor education course include:
- Preparing and living within a budget;
- Dealing with an unexpected monetary crisis;
- Setting and reaching reasonable financial goals;
- Effective money management;
- Saving money and emergency savings accounts;
- Planning for retirement;
- Consumer protection laws;
- Using credit wisely; and,
- Ways you can cut expenses.
The information in the post-bankruptcy course is intended to provide the debtor with the knowledge and skills necessary to manage money and use credit wisely after completing his or her bankruptcy case.
Filing a Bankruptcy in Prescott Arizona
If you are ready to begin the process to file a Chapter 13 or Chapter 7 case, call 928-277-4304 or use the contact form on our website to schedule a free bankruptcy consultation with a Prescott bankruptcy attorney.