What is Credit Counseling and Debtor Education?

Debt FreeWhen Georgians file for a Chapter 7 or Chapter 13 bankruptcy application, they must fulfill a requirement called debtor education and they also complete mandatory credit counseling.  The purpose of these two requirements is to help bankruptcy filers avoid the need to file for bankruptcy in the future.  These requirements are absolutely necessary to the bankruptcy process, so it is highly advised that you contact an experienced bankruptcy attorney who can help you make sure you meet these requirements in order to ensure the success of your bankruptcy.

Bankruptcy’s Credit Counseling Requirement

The credit counseling requirement actually kicks in before you file for bankruptcy.  Specifically, during the 180-day period immediately preceding the time when the actual bankruptcy application is submitted to the court, the person filing the bankruptcy (called the debtor) must receive counseling from a credit counseling agency that has been approved by the U.S. Trustee’s Office.  In order to prove that this counseling has been received, the debtor will receive a certification of completion from the agency which should be filed with the bankruptcy court as well.  Usually, this requirement can be completed online, over the phone, or in person.  There are a small number of exceptions to this requirement, which can be discussed with a knowledgeable bankruptcy attorney.

If you do not qualify for any of the exceptions and you fail to complete the required counseling, the bankruptcy court will likely dismiss your case.

Why Do I Have to Complete the Credit Counseling?

The purpose of the credit counseling requirement is to help the debtor confirm that he/she does not have any alternatives to their financial problems other than to file for bankruptcy.  To do so, the course will discuss the debtor’s expenses, debts, and income in order to determine whether it is possible for the debtor to work out a repayment plan or resort to other options in place of filing for bankruptcy.  Usually, the debtor has already met with an experienced attorney and already discussed these options, so most of the time the counseling agency just confirms that the debtor does not have any other choice but to file for bankruptcy.

Bankruptcy’s Debtor Education Requirement

In contrast to the credit counseling requirement which must be completed before the bankruptcy application is submitted, the debtor education requirement must be completed after the application is submitted. However, this requirement must be completed before the bankruptcy court will grant the discharge of your debts.

This course aims to teach debtors how to improve their financial state after filing for bankruptcy and how to avoid the need to do so in the future.  The course teaches debtors how to utilize credit cards in a responsible manner, how to manage their money and bills, and offers advice on how to maximize the benefits of their bankruptcy discharge.

When Do I Need to Complete the Debtor Education Requirement?

The debtor education requirement must be completed within 60 days of the 341 meeting if you filed for Chapter 7 bankruptcy.  If you filed for Chapter 13 bankruptcy, then you must complete this requirement before you make your last Chapter 13 plan payment.  Just like with the credit counseling, you have to fulfill the debtor education requirement with an agency that has been approved by the U.S. Trustee’s Office and the court must receive proof of your certificate of completion.

If you do not complete this requirement, the bankruptcy court may close your case and you would need to pay additional fees in order to have the court reopen your case.

In order to have a successful bankruptcy, there are other requirements that must be met and rules that must be carefully followed.  To learn more about the bankruptcy process, contact our office today to speak to a knowledgeable attorney.  We look forward to speaking with you!