Credit Counseling and Financial Management Training – Traps for Debtors

05 Feb Credit Counseling and Financial Management Training – Traps for Debtors

Debtors can’t file a bankruptcy case without taking credit counseling  And they can’t get a discharge without taking a financial management course.  Even 4 years after the 2005 amendments to the Bankruptcy Code, this message bears repeating.

These courses are a hidden tax on bankruptcy debtors.  They increase the cost of a bankruptcy case and provide little to no benefit.

What have we learned? We rarely see a problem with “Credit Counseling.”  That’s because we won’t file a bankruptcy case without a Credit Counseling certificate in our hot little hands.

Too frequently, we see a mess-up over the “Financial Management Course.”  And that’s sad. If you don’t take the financial managment course, your case will be closed without a discharge. All of your work to get a fresh start goes down the drain if you don’t get a discharge.  And worse, if we don’t fix this, creditors will start hounding you and even garnishing your wages again.  They will.

Don’t panic.  Even though we told you that you needed a financial managment course and certificate, we can still fix this.  We have to move to reopen your case.  This costs $250.  And we have to go to court to present a motion to reopen your case and to file your financial management certificate.  That costs time and money too.  You have to pay for this.   We’re sorry but we can’t do this for free.

We want our clients to get their discharge without this extra time and expense. So until we can convince Congress that this is a waste of time and money, please, please, please, dear clients, take the credit counseling, and take the financial management course.  Give us the certificates and we’ll get you on your way to a bankruptcy discharge and financial recovery.

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Jay S. Fleischman is a bankruptcy lawyer with offices in Los Angeles and New York. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.
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