In addition to the “credit counseling” that you must do before you can file a bankruptcy case, after filing the bankruptcy you must also complete “an instructional course concerning personal financial management” in order to get a discharge of your debts. This second step is generally called the “debtor education” requirement.
It is required in both Chapter 7 and Chapter 13 cases, as stated in Sections 727(a)(11) and 1328(g) of the Bankruptcy Code.
The Most Important Thing to Know about This Requirement
The most important thing is to get it done, and done on time. The primary goal of a Chapter 7 case is to get a discharge of your debts. Most Chapter 13 cases have that as a major goal as well—to discharge whatever debts are not paid during your case. If you do not complete the debtor education step, your bankruptcy case will close but you will not receive a discharge of your debts. You will have gone through a great deal of trouble without getting to your intended goal.
If your case is closed without a discharge, usually you can still complete the debtor education, a judge will likely be persuaded to reopen your bankruptcy case and enter the discharge order, but there are two big reasons you want to avoid having to go through all that:
- It would cost you hundreds of extra dollars of filing fees and attorney fees for this additional work.
- Your creditors would be able to pursue you and your assets during the period of time from when your case is closed until this problem is fixed. Clearly these are consequences you want to avoid.
So What Does “Debtor Education” Actually Involve?
This 90-minute or so class is “designed to assist debtors in understanding personal financial management“—such as the appropriate use of credit, and budgeting skills. Like the pre-bankruptcy “credit counseling,” it can be done online, over the phone, or in person. You can choose to have it be in English or various other languages. When both spouses file a joint bankruptcy, both spouses must take this course. When you complete the course, you receive a certificate of completion which must be filed at the court.
Also like “credit counseling,” the service is provided by a long list of agencies approved by the U.S. Trustee’s Office. Because these agencies’ quality, convenience, and cost can vary widely, and can also change over time, if you are in the Dallas or Fort Worth area please call us, Leinart Law Firm, for information about credit counseling.
