After the passing of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 by the United States Congress, it became mandatory for all those filing both Chapter 7 and Chapter 13 bankruptcy to undertake a debtor education course via an agency that has been approved by the courts after the bankruptcy petition has been filed.
This course is known by a number of names, but the key thing to remember is that it must be completed before the bankruptcy can be signed off and you can move forward with your life. Also, in cases where you are declaring bankruptcy alongside a partner or spouse, both will need to complete the course.
Differences Between Credit Counseling and Post-Filing Debtor Education Course
You will need to take two mandatory courses during the bankruptcy proceedings. The first is a credit counseling course, which begins prior to the filing and helps you to explore a number of potential alternatives to bankruptcy. This course ensures you are more informed about the process and what it might mean for you. Also, you need to have a certificate of completion from this course, as it will be filed with your bankruptcy paperwork should you choose to go ahead.
The debtor education course is something that you have to take once you have filed for bankruptcy but before you get the discharge that concludes the process. It is designed to teach people useful financial strategies that will help them to avoid getting into similar situations in the future, making it crucial to your financial health post-bankruptcy.
Another important point to remember is that the course you take needs to be approved by the Office of the U.S. Trustee. Courses in general need to last a minimum of two hours and will have to cover a set of required topics before the agency providing the course can be approved.
In the case of a debtor education course, it isn’t a requirement for the agency providing the course to be a non-profit organization. However, it still needs to have that approval, plus any agency that gets the approval must also offer a sliding scale payment plan if you are unable to afford the full price of the course.
The course can be taken in a classroom environment, online or via mail, so you have a little flexibility in terms of fitting it around your personal and work life.
The key is that it must be approved, so do your research before wasting your time on a course that doesn’t provide what you need. Thankfully, the United States Department of Justice website provides a list of approved course providers for you to choose from.
When To Take The Course
The technical name for the certification you will receive upon completion of the course is Form 423 and it needs to be filed at specific times, depending on the type of bankruptcy you are undergoing.
In the case of Chapter 7 bankruptcy proceedings, the form and associated certificate need to be filed no more than 45 days after the date that your first meeting of creditors was scheduled. If you miss the deadline there is a possibility that the courts might close your case, which not only wastes time but also puts you in a position where you will need to repay the filing fee again to get it reopened.
Chapter 13 bankruptcy is a little different, as Form 423 and the associated certificate from your debtor education course should be filed on or before the date that you make your last plan payment. Many recommend taking the course earlier in Chapter 13 bankruptcies, as it can provide you with some useful information that will help you to set up your budget and actually complete the plan.
A Word On Form 423
Form 423 is also known as the Certification About A Financial Management Course. It is a required component and certifies that you have taken the course. It needs to be filed alongside the certificate of completion that you received from a debtor education agency that has been approved by the Office of the U.S. Trustee.
The Final Word
As scary as bankruptcy proceedings can be, a debtor education course will actually help you an enormous amount in your life after bankruptcy. It will help you to manage your finances effectively, while also giving you a greater understanding of the process of bankruptcy.