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Credit Counseling Courses Within Bankruptcy

by Adam Mack, J.D.
Pre-Filing Course
Preparing to file bankruptcy can be a fairly involved process. Many financial records need to be gathered, as well as any other pertinent information such as documentation of any lawsuits, garnishments, or other judgments. One other hurdle that must be cleared prior to filing is the pre-filing credit counseling course.

The pre-filing credit counseling course was mandated by law in 2005 with the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act (also known as BAPCPA). BAPCPA states that a person cannot file unless he or she, “during the 180-day period ending on the date of filing of the petition by such individual, received from an approved nonprofit budget and credit counseling agency…an individual or group briefing (including a briefing conducted by telephone or on the Internet) that outlined the opportunities for available credit counseling and assisted such individual in performing a related budget analysis.”[1]

This “briefing” or educational course is far less intimidating than it sounds. Essentially, it’s a full disclosure, an opportunity for you to receive objective information about bankruptcy, other debt-relief options, and sound financial management. During the pre-filing credit counseling course, you’ll also review your personal budget. The course can be taken either on the phone or via the Internet and at your convenience. The credit counseling course takes a minimum of 1 hour, and if you’re married and filing a joint petition, you will both have to take the credit counseling course either individually or together.
Post-filing Course
After all the hoops have been jumped through to file, and any bumps along the way are overcome, you receive a discharge. However, that discharge is dependent upon you completing a post-filing financial management course. This course was also mandated by BAPCPA, which requires that it include an “analysis of such client’s current financial condition, factors that caused such financial condition, and how such client can develop a plan to respond to the problems without incurring negative amortization of debt.”[2]

This course is required whether you’re filing under Chapter 7 [3] or chapter 13 [4], and is a bit more involved. By law, a debtor must take at least 2 hours to complete the course. Just like the Pre-Filing course, both husband and wife have to take the course if they are filing jointly, which can be taken via the internet or telephone.

If the post-filing course isn’t completed in a timely manner, your discharge is revoked and you have to begin the bankruptcy process all over again.
The Most Important Part
Clearly, it’s critical that everybody who files bankruptcy complete both of these credit counseling courses. While they can seem like time-consuming busywork, both courses are an essential part of the bankruptcy process and ultimately are for the benefit of those filing.

[1] 11 U.S.C. §109(h).

[2] 11 U.S.C. §111(c)(2)(E).

[3] 11 U.S.C. §727(a)(11).

[4] 11 U.S.C. §1328(g)(1).


These articles are for general informational use and do not constitute legal advice. Since laws change over time, it’s possible some articles are out of date and for that reason, we make no representation that the articles are fully accurate. For actual, up-to-date legal advice (including a free consultation), please contact us!