Since the passing of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCA), all bankruptcy filers must take and pass two educational courses. One class, the credit counseling class, must be completed prior to filing, and the other class, the debtor education class, has to be completed after the filing. To find out more, read on.
When Should the Class Occur?
Once you have filed your chapter 7 bankruptcy, this class should be completed after your creditor's meeting. Once the creditor's meeting has occurred, you have only 60 days to complete the class and send in the certificate to keep your bankruptcy moving along on schedule.
If you fail to complete the class on time, you stand to lose the case. If your bankruptcy case is dismissed, you must start the process all over again.
That means the automatic stay that prevented debt collection is lifted, and court proceedings, wage garnishment, and other collection activities can proceed. In addition, you must pay the filing fee and attorney fees again if you wish to re-file.
Does Everyone Have to Complete the Class?
In general, all filers should complete the class. In certain situations, however, waivers are offered.
If you meet any of the following, the class requirement could be waived:
- Military on active duty and assigned outside of US borders
- Those with a physical or mental disability
- No local availability of class offerings
How Much Does the Class Cost?
The fees are offered by independent credit counseling agencies. and they will vary by location. The rules allow agencies to charge no more than $50.00 unless they have special permission.
If you can demonstrate that you cannot afford to pay the fee for the class, you may able to use a waiver to pay for the class. The waiver provides either the full payment or reduced payment for the class. Those who are able to obtain these waivers must show that their income is below the poverty level for their state of residency.
What is Offered During the Class?
The stated goal of the debtor education class is to improve a filer's grasp of financial matters in order to prevent future bankruptcy filings. With this in mind, you will find subjects like the following addressed during a typical two-hour or so class:
- How to create a budget that covers your bills and includes a savings plan.
- Information about how to make wise choices in consumer matters and what protections from lenders are available to consumers.
- The importance of setting funds aside to cover emergencies like car repairs, medical needs, and more. Since many people tend to use credit cards to cover their emergency expenses, this way of handling unforeseen expenses keeps the responsibility on the consumer and not on the use of credit.
- How to rebuild your credit after a bankruptcy, and how to use credit wisely in the future.
This class is available online, in person, and by mail. For more information, contact a bankruptcy attorney such as Greg Dunn Bankruptcy Attorney.