Why Do I Have to Take a Pre-Filing Bankruptcy Class and a Pre-Discharge Class?

Why do I have to complete a pre-filing class?

Before your bankruptcy can be filed, you must complete a credit counseling session. The cost ranges from $10.95-$50.00. The agency provides a certificate of completion that must be filed with the bankruptcy petition, schedules, and statements. The course is available online, over the phone, and through the mail. The agency must be approved by the U.S. Trustee.

The alleged purpose of the credit counseling is to give you an idea as to whether you need to file bankruptcy or whether a payment plan with your creditors would suffice to get you back on your feet. However, the counseling is required even if it is obvious that a repayment plan will not work for your situation. This is usually the case when your debt is high and your income is low or you are facing balances on debts with inflated interest rates and penalties.

The requirement is that you complete the counseling but does not require that you follow the counseling’s recommendation. Even if a repayment plan is feasible, you are not required to agree to it.

Why do I have to complete a pre-discharge class?

You are required to take an approved personal finance course before the court will discharge your debts in a Chapter 7 or Chapter 13. The agencies providing this service must be approved by U.S. Trustee. In a Chapter 7 the course is to be completed within 45 days after the date on which the creditors meeting was scheduled.  If you miss the deadline the court may close the case without a discharge of your debts. That means you will have to pay to reopen the case so that the course certificate can be filed in order to receive a discharge.

If you are considering bankruptcy, contact our office for a free consultation to meet with one of our attorneys to determine if bankruptcy is right for your situation.

What is the cost of each course?

The cost varies depending on which company you chose to go with. The typically range from $10.95-$50.00 depending on which company and which method to take the class. Online classes are cheaper than the phone course. Some companies may also have financial aid meaning that depending on income, they may waive the fee for taking the course.