In most bankruptcy cases, the main purpose of filing is to obtain a discharge. The bankruptcy discharge is essentially a legal injunction against the enforcement or collection of debts. To obtain your bankruptcy discharge, you must complete two separate courses: credit counseling and debtor education.
Via different providers, you can take these courses either online or over the phone. The providers of these courses are nonprofit agencies. Once you have successfully completed each course, a certificate will be emailed to your bankruptcy attorney.
Credit Counseling: the First Course
The first course is called “credit counseling” and must be completed prior filing your case. The bankruptcy court clerk will dismiss your case if you have not previously obtained credit counseling. The course is a mandatory requirement for filing bankruptcy.
Unfortunately, the course is not really about counseling at all. In fact, it is a waste of time and money. It should take about an hour if you take the course online, but it will take much longer if you take it over the phone.
During credit counseling, you must provide your approximate monthly income and expenses. The counselor (or website) will then suggest ways to reduce your spending. Do not take this to heart — just plow through the course and complete it.
Many providers accept payment for the course upon completion. Do not forget this step, or you will not receive your certificate. You must use a debit card, not a credit card, to pay for the course.
The credit counseling certificate expires after 180 days, so you should plan on taking the course within six months prior to filing bankruptcy.
Debtor Education: the Second Course
The second course is called the “debtor education” or “personal financial management” course. You cannot complete the course without your bankrutcy case number, so your case must first be filed before you take the course. You will be denied a discharge if you do not complete the debtor education course.
The course will take about two hours, however unlike credit counseling, my clients tell me that the debtor education course is actually quite interesting. Again, you must pay with a debit card. The course provider will email your bankruptcy attorney your “Certificate of Debtor Education.” Your attorney will file this certificate on your behalf.
In most cases, you have several months to complete this course, but you should discuss the requirement with your attorney to see how your jurisdiction handles this course. In the Alexandria Bankruptcy Court, for instance, the Chapter 13 trustee provides a lively and entertaining debtor education course for free on the date of your meeting of creditors.
Credit Counseling and Debtor Education are Mandatory Requirements
Both credit counseling and debtor education are mandatory requirements for you to obtain your bankruptcy discharge. The clerk of court will dismiss your case if you do not complete either requirement. If you have any questions about these courses, be sure to ask a knowledgeable bankruptcy attorney.