You’ll need a “ticket” to get into bankruptcy, and a second “ticket” to get out.
Arrive in bankruptcy without the first ticket (or a really good excuse) and your case will get dismissed.
Get to the end of your bankruptcy case without the second ticket, and your case gets closed without a discharge.
So, these tickets are worth a lot. Worth the amount of the debts you are discharging.
So, let’s talk about tickets.
Bankruptcy Credit Counseling
The ticket into bankruptcy is a credit counseling session.
Congress imposed this requirement because someone told them that “unscrupulous bankruptcy lawyers” were pushing people into bankruptcy when there were other effective options.
It might have happened occasionally, but I can report from 30 years of experience that virtually everyone who makes an appointment to meet a bankruptcy lawyer would benefit from a bankruptcy discharge.
But Congress has mandated that you have to engage with a third party who will evaluate whether you have meaningful , non bankruptcy options.
You aren’t bound by the advice provided by the counselors. They don’t have to approve your choice. You just have to go through the exercise.
You must take the counseling within 6 months of the filing of your case. If your certificate is older than that, you need to retake the session.
The providers of pre bankruptcy credit counseling are approved by the UST in each judicial district. You must complete the counseling session before filing your case, and file the certificate proving completion with the court.
It generally adds no value; it’s just a hoop to jump through.
Not so, the post filing financial management class.
Financial Management Class-the ticket out
The debtor education class aims to equip you to make good financial decisions going forward. Lots of my clients report that they wish they’d had that information earlier in their lives.
Though it’s called a “class”, the education component is more like a single lecture. It takes an hour or two to complete online.
It’s not really the ticket out of bankruptcy itself: it’s the ticket to getting out with the discharge of your debts, the goal of the entire exercise.
If you fail to take the class, get and file the certificate of completion, the court will close your case without entering the discharge.
You can go back, have the case reopened, file the certificate and get the discharge. At minimum, it will cost you a second filing fee on top of whatever your attorney will charge for the work.
You can take the class anytime after your bankruptcy case is filed.
Get on it, get it done, and get the benefit of having filed bankruptcy.
What’s involved in filing bankruptcy
Understanding the bankruptcy discharge
Excuses not to file bankruptcy
Image courtesy of Flickr and quite peculiar.