Credit Counseling: Still Required For Filing A Personal Bankruptcy

22 Nov Credit Counseling: Still Required For Filing A Personal Bankruptcy

Credit Counseling: Still Required For Filing A Personal Bankruptcy
Recently in court I listened to a debtor representing herself trying to explain to the judge that she hadn’t received the required credit counseling before filing bankruptcy because it was an emergency and she had to file right away.
Unfortunately, as the judge patiently explained, he couldn’t do anything about it: if the credit counseling course isn’t completed, you can’t file a personal bankruptcy.  The debtor’s petition was quickly dismissed.
There are limited circumstances where you can file for bankruptcy without completing the course, but they are very unusual.  The debtor must prove to the court that some exigent circumstance existed and that she tried to get but couldn’t receive such counseling during a five day period after the request was made. This is nearly impossible since most, if not all, credit counseling services offer internet or telephonic compliance.
Additionally, there is an exception build into the law if you can prove at a hearing in front of the judge that you are incapacitated, disabled or on active military duty.  The code defines “incapacitated” and “disabled” very narrowly, so it doesn’t apply except in the most egregious of cases.
The bottom line: get your counseling done at least a day before filing the papers for a bankruptcy.

Recently in court I listened to a debtor representing herself trying to explain to the judge that she hadn’t received the required credit counseling – a necessary step before filing bankruptcy – because it was an emergency and she had to file right away.

Unfortunately, as the judge patiently explained, he couldn’t do anything about it: if the credit counseling course isn’t completed, you can’t file a personal bankruptcy.  The debtor’s petition was quickly dismissed.

There are limited circumstances where you can file for bankruptcy without completing the course, but they are very unusual. The debtor must prove to the court that some exigent circumstance existed and that she tried to get but couldn’t receive such counseling during a five day period after the request was made. This is nearly impossible since most, if not all, credit counseling services offer internet or telephonic compliance.

Additionally, there is an exception build into the law if you can prove at a hearing in front of the judge that you are incapacitated, disabled or on active military duty.  The code defines “incapacitated” and “disabled” very narrowly, so it doesn’t apply except in the most egregious of cases.

The bottom line: get your counseling done from an approved company at least a day before filing the papers for a bankruptcy.

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Douglas Jacobs is a California bankruptcy attorney and partner in the Chico law firm of Jacobs, Anderson, Potter & Chaplin. Since 1988, Mr. Jacobs has taught Constitutional law and Debtor-Creditor/Bankruptcy law at the Cal Northern School of Law. He has served as Dean of Students since 1994. He is a frequent lecturer on the subject of consumer bankruptcy law, and has spoken at both state and national levels.
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