Completing Debtor Education After Filing Chapter 13

Everyone seeking Chapter 13 bankruptcy relief has to complete a mandatory credit counseling class before their case can be filed with the bankruptcy court. This has to be done in the 6 months before the case is filed. But what about the second required course? What is that all about and when is the best time to take it? Keep reading to find out. 

Bankruptcy Credit Counseling and Debtor Education Courses: A brief overview

Before filing a Chapter 13 bankruptcy or a Chapter 7 bankruptcy, you will be required to complete two courses before you can receive your bankruptcy discharge. The first course is called the pre-filing credit counseling course which must be taken through a provider that is approved to offer the course in the district you file. The credit counseling course provides information about other options that may be available to you aside from bankruptcy. The court requires the completion of this course to ensure you have researched all of your other options before deciding to file bankruptcy. The bankruptcy credit counseling course must be completed 180 days before you file your bankruptcy petition. 

The second course is called the debtor education course or the financial management course. The post-filing debtor education course was added by BAPCA to educate individuals about their finances and give them all the tools they need so they don’t end up having to file bankruptcy again. Like the first course, this course must be taken through an approved debtor education provider. Failing to complete the course will prevent you from getting your discharge. This means your bankruptcy case will close and you will still be liable for whatever debts did not get paid through your Chapter 13 plan. If this happens, you will need to pay money to reopen the case and provide the court with a certificate of completion showing that you completed the Debtor Financial Management Course. 

Keep in mind, that not all credit counseling agencies are approved to administer both courses, so make sure the provider you're using has been approved to offer it in your district by the U.S. Trustee’s Office.  If you live in Alabama or North Carolina, check with the Bankruptcy Administrator’s Office for your district to find an approved provider.

What to expect from the Debtor Education Course

The pre-discharge debtor education course is different from the credit counseling course. Unlike the credit counseling course that deals with your debt, this instructional course gives you tips and tools to prepare you for life after your bankruptcy discharge. The course encourages individuals to educate themselves on ways they can save money so that they don’t get into credit card debt in the future. The course will provide insight on how to manage money, how to use credit cards, and how to deal with unexpected financial disasters. It will also provide budgeting tips, tricks, and strategies to stay financially healthy. 

Keep in mind that there is a test at the end of the course. Don’t panic! Most people pass the test with flying colors! If you don’t pass you will be required to speak with a credit counselor instructor who will go over why you didn’t pass. 

Where Can I Complete the Course?

Individuals often worry that they physically have to go to some location to complete the course and won’t have time to do so in between their busy schedules. Luckily, many providers allow you to complete the course from in the comfort of your own home. Depending on which course you choose, individuals can complete the course online, over the phone, or in person. If you have a preference as to where you want to complete the course, you should do some initial research to ensure that your provider offers a location that is convenient for you. 

How Long Does the Debtor Education Course Take?

The debtor education course takes about two hours to complete. If you take the course online, some providers will allow you to save your progress and come back to it at a more convenient time. 

How Much Does it Cost to Complete the Debtor Education Course?

The Debtor Education Course usually costs between $15 - $50 depending on the provider you choose to complete it with. The Executive Office for the U.S. Trustees (EOUST) has set a figure limiting the fee to the course to be under $50. Any debtor education provider that wants to charge more must get approval from the EOUST. 

If you are below 150% of the poverty line, you may qualify for a fee waiver. You will need to show your provider that you can’t pay the course fees based on your current financial situation. If the provider believes that you can’t pay the fees, the fees will be waived. In some cases, the provider may allow you to pay a reduced fee if they feel that you can afford to pay something. 

What Happens After I Complete the Course?

After the course is completed, you will get a certificate of completion. The certificate of completion can be faxed, emailed, or mailed to you. Once you receive the certificate, you will need to file it with the court. You can either do this electronically or go to the Clerk’s office to give it to them personally/mail it to the court. Some districts allow individuals to submit the certificate through an online portal and some course providers will file the certificate with the court for you automatically. It is important that you file the certificate as soon as you complete the course so that you don’t lose it or forget about it. If you forget to file the certificate, the court won’t be able to enter your discharge. 

When to complete the Debtor Education Course after filing Chapter 13 bankruptcy 

The Bankruptcy Code provides minimal details on when the course must be completed. According to the Code, the course must be completed sometime after filing your bankruptcy petition. If you are filing a Chapter 7 bankruptcy, you will need to complete this course as soon as possible. Chapter 7 cases are much shorter and failing to take the course timely may cause your case to close without a discharge. 

Although, it is up to the individual debtor when he or she wants to complete the course, it’s recommended that individuals filing a Chapter 13 bankruptcy complete the course sooner rather than later. A Chapter 13 bankruptcy can last anywhere between 3-5 years and although you don’t need to complete it until sometime before your last plan payment, it's best to do it sooner rather than later so you don’t forget. Moreover, if budgeting is challenging, it may make sense to do it sooner so you can use what you’ve learned to stay on track for your Chapter 13 plan repayments.