Step right up, get your ticket, get your ticket. Sound familiar? But these tickets are the tickets that get you into Chapter 7 and out of Chapter 7 with a discharge.
Among the “hoops” added to the process of filing Chapter 7 by the bankruptcy amendments of 2005 were requirements for a credit briefing before filing and a class on financial management before discharge. Fail to get the credit briefing and your case can be dismissed. Neglect to attend the financial management class and your case can be closed without a discharge.
Among bankruptcy professionals, there is uniform opinion that the credit briefing is without merit. Congress was sold on the idea that some debtors were stampeded into bankruptcy by greedy lawyers, when there were other, non bankruptcy alternatives. I don’t think so: most individuals wait so long to consult a bankruptcy lawyer that the financial hole is too deep for escape by counseling. The credit briefing is just one more requirement and one more expense on the road to a discharge.
I have somewhat greater hopes for the financial management class. For many debtors, this is a “teachable moment” when they are open to ideas about how to do better with their money in the future. Of course, if the bankruptcy was driven by job loss, illness or divorce, it’s hard to imagine what one can learn to avoid these precipitating factors.
The biggest pitfall in the financial management class, which usually takes an hour or so, is failure to complete it soon enough to file the certificate of completion with the court. If the case is closed without discharge by reason of no certificate, the case can be reopened to file the certificate, but at the cost of a second filing fee!
Watch the timing closely. The credit counseling must be completed within the 180 days before the case is filed and obtained from an approved provider. The financial management class must be taken after the case is filed and before the time for entry of discharge.
Get it right and you pass through bankruptcy with a fresh start.
Image courtesy of sister72.
