Since the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 or BAPCPA was enacted, consumers or debtors who would like to file for bankruptcy, especially under Chapter 7 and Chapter 13 are required by the bankruptcy court to complete a credit counseling course and a debtor education. Failing to do otherwise will make the court dismiss a debtor’s bankruptcy case.
The credit counseling and debtor education requirement in bankruptcy
While both certificates for a credit counseling and debtor education is a requirement for bankruptcy, both are not satisfied at the same time. This is because credit counseling must be completed first before a debtor can file for bankruptcy and receive it from a credit counseling agency that is approved by the U.S. Trustee’s Office. A debtor should have their own certificate of complete within 180 days prior to their filing of the bankruptcy case.
On the other hand, a debtor education is required after a debtor files for a bankruptcy case either under Chapter 7 or Chapter 13. Just like in the case of approved credit counseling agencies, the United States Trustee Program or USTP has a list of approved debtor education providers that debtors can look at. These approved providers ensure that the quality of debtor education is guaranteed. Debtors should take note that without completing the debtor education, there will be no discharge for the bankruptcy case.
Purpose of debtor education
In credit counseling, debtors are taught other alternatives in order to help manage debts aside from bankruptcy so the course focuses more on income, expenses, and debts. On the other hand, debtor education focuses on what happens to a debtor’s life after the bankruptcy case is done. This course teaches debtors who are now free of debts or have found a way to manage their debts through a repayment plan, manage their money, use credit card wisely, and maximize the bankruptcy discharge. In short, debtor education teaches consumers how to avoid going bankrupt in the future by making sound financial decisions.
Completing the debtor education course
Debtors who filed for Chapter 7 bankruptcy must complete their debtor education course 60 days before the set date of the 341 hearing or meeting of creditors. For Chapter 13 bankruptcy, the debtor education course should be filed before the debtor makes his or her last payment on the agreed repayment plan.
Power of attorney and debtor education
It is also important to take note that there are some cases when a debtor, like an incarcerated one, takes the power of attorney to take the debtor education course. Some state law grant the power of attorney to a debtor given that the certificate contains the name of the debtor and the representative’s name with their legal capacity in the case. Also, debtor education fees range from $50 to $100. However, a debtor may ask the debtor education provider to reduce the fees or totally waive it if it the debtor cannot afford it.