Why Bankruptcy Courses Are Important

Filing for bankruptcy is a big decision with a lot of consequences, some of them long-term. Deciding if bankruptcy is the right choice and handling your finances after the proceedings are complete can be daunting parts of the process. This is why there are two bankruptcy courses that would be filers and filers are required to complete.

You may feel as though these classes are a burden, just something else you have to add to the long list of things required of you. But these bankruptcy courses are important and you will find a lot of value in them.

The First Course: Credit Counseling

Bankruptcy can be the fresh start people need, a reset for their finances. But it could possibly negatively impact certain areas of your financial life for years to come and therefore should be an option that you consider with the help of an attorney.

The first course is a pre-filing credit counseling class designed to help you decide if filing for bankruptcy is the right decision for you. During the course, you’ll review your overall financial picture, things may not be as bad as you thought and can perhaps be managed with strict budgeting. And you’ll learn about alternatives to filing for bankruptcy including debt consolidation and debt negotiation.

The course must be taken through an approved agency and can be completed online or over the telephone. The class usually lasts about an hour and must be completed within 180 days of filing for bankruptcy. In order to receive bankruptcy approval filers must provide proof in the form of a course completion certificate that they took the credit counseling course. This is a no-fail course. As long as you complete it, you’ll receive the certificate of completion.

The Second Course: Debtor Education

The Debtor Education course is taken after you’ve filed for bankruptcy. The course is designed to help people better manage their finances going forward so that they won’t need to file for bankruptcy again one day (We recognize that many people file for bankruptcy because of things like medical bills and not because they were not adept at handling their finances). The course covers topics like budgeting, using credit cards responsibly, and breaking bad financial habits.

The course lasts about two hours and can be taken online or over the phone. A certificate of completion will be provided once you pass the test.

 For a Chapter 7 bankruptcy, the certificate must be filed with the court no later than 60 days after the date first set for the 341 meeting of creditors (a hearing all filers are required to attend). Those filing Chapters 11,12, or 13 are able to submit the certificate anytime before making the final payment of their repayment plan.

What Happens If You Fail to Complete the Debtor Education Course?

Nothing you want to deal with! If you don’t complete the course before the deadline, the court will likely close your bankruptcy case without a discharge. In order for your debts to be discharged, you will be required to file a motion, pay the required fees, and ask that the court reopens your case so you can take the class, file the completion certificate, and get the discharge.

Bankruptcy is already a stressful process and anyone filing it is obviously not in a good financial position. Failing to take this course adds additional stress and costs more money.

It’s Not a Punishment

Don’t look at these bankruptcy courses as a punishment. We understand feeling insulted if you had to file for bankruptcy because of circumstances outside of your control and having to take a class that teaches you how to create a budget. But for most people, even those who already know how to handle their personal finances, these courses can teach things you didn’t know.

And the Credit Counseling course, the first one, can show you alternatives to bankruptcy that you may not have considered which can mean avoiding the long-term consequences of filing for bankruptcy like the damage to your credit score.

And even if we haven’t convinced you that bankruptcy courses are important and useful to the vast majority of those who complete them, well, they only last about three hours!