28 Mar Waiver Of Credit Counseling And Debtor Education Ends For Eastern District Of Louisiana
R. Michael Bolen, the U.S. Trustee for Region 5, has announced that debtors filing for bankruptcy in the Eastern District of Louisiana must begin to take Credit Counseling and Debtor Education beginning on September 16, 2009.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) required all debtors to take credit counseling before filing for bankruptcy. BAPCPA also requires debtors to take a personal financial management class before the debtor could obtain a discharge in bankruptcy. Some refer to these as the ticket in and the ticket out of a bankruptcy.
Failing to take the credit counseling course before filing bankruptcy can result in dismissal of a case. Failing to take the financial management course can result in a bankruptcy case being closed without obtaining a discharge.
Because of the significant damage done to the Gulf Coast area by Hurricane Katrina and Hurricane Rita, the Coastal area of Mississippi and the entire State of Louisiana received a waiver from the counseling and financial management provisions of BAPCPA.
The reason was two-fold: First, there was a concern about how to offer counseling and financial management services in an area that had experienced a major natural disaster, and secondly, it would have added insult to injury to require people, many of whom are filing for bankruptcy because they have lost everything in a hurricane, to undergo counseling to determine the reasons why they were filing for bankruptcy.
Over the last year or so, the counseling and financial management requirements of BAPCPA have been imposed upon the Gulf Coast of Mississippi and most of Louisiana, leaving the Eastern District of Louisiana as the last area of the state without these requirements.
The Eastern District of Louisiana Includes the Greater New Orleans area and most of the Southeast portion of Louisiana which were some of the areas hardest hit by Hurricane Katrina.
Many, including this writer, question the value of the credit counseling and financial management course requirements. The requirements increase the cost of a filing, and are traps for the unwary that can lead to a dismissal of a bankruptcy or the closing of a case without a discharge.
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