In order to file a chapter 7 or chapter 13 New York bankruptcy a debtor must take what the Bankruptcy Code refers to as “an instructional course concerning personal financial management.” (11 U.S.C. § 727(a)(11)) What is this requirement?
In 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), which changed a debtor’s responsibilities to include taking an “individual or group briefing … that outline[s] the opportunities available for credit counseling and assist[ing the debtor] in performing a related budget analysis.” (§ 109(h)(1)) The details are spelled out in full in § 111 of the code. Essentially, the point of the course is to discourage people from filing bankruptcy. Here’s a distillation of the important points surrounding the requirement:
- First of all there are actually two courses. The first is credit counseling. Debtors must take this course within 180 days of filing bankruptcy. The certificate should be filed at the same time as the bankruptcy petition or shortly thereafter, or the case will be dismissed.
- The second is the debtor education/financial management course, which must be done — and the certificate filed — within 45 days of the 341 meeting. Failure to take the second course will result in the case being closed without the debtor receiving a discharge.
- Courses are provided by nonprofit agencies approved by the U.S. Trustee’s Program. They are multilingual.
- The course isn’t free, but it can be bought for cheap, like $20 to $75. It can be taken in person — when it is safe to do so — on the Internet, or over the phone.
- Despite the triviality of the requirement, the consequences of not taking the courses or failing to file the certificates of completion are significant.
- There are exceptional situations where the courses aren’t required, such as when the debtor is incapable of taking them whether due to incapacity, disability, or active military duty in a military combat zone. Debtors can also attempt to waive the requirement by claiming exigent circumstances prevent them from completing the courses. This doesn’t happen often.
The financial management course is one of many requirements debtors must meet to complete bankruptcy successfully. An experienced New York bankruptcy lawyer will ensure that you complete it and all the other necessary steps to obtain your fresh start.
For answers to more questions about bankruptcy requirements, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy attorney Bruce Weiner for a free initial consultation.
