Debtor Education Requirement

It’s an unfortunate fact of the world we live in, but it is not at all unusual in today’s world to have debt issues.

Debt simply doesn’t have the stigma it used to but fortunately, because it’s so prevalent in our society people can now find greater support than ever before.

Here, we’ll discuss all of the most important elements of the debtor education process.

We’ll also explain what you can expect from a debtor education program after filing bankruptcy or for any other debt relief program as most will require this in some form, and then we’ll cover some basic yet effective steps you can take to be ahead of the game and regain some confidence while developing good fiscal discipline.

What The Debtor Education Requirement Is Used For

The main purpose of debtor education is to learn about basic concepts related to budgeting, saving, and financial management, to prevent clients who are filing bankruptcy from ever finding themselves in the same situation ever again.

Debtor education is required regardless of your pre-existing knowledge or skill level, and regardless of the actual reason you filed bankruptcy.

This requirement is in place so the bankruptcy courts know the person has undergone a basic financial management course, and in effect, has been provided with skills and knowledge that will put them on the road to success after they have gained a fresh start after bankruptcy.

Various Names the Bankruptcy Courses May Be Called

The credit counseling and debtor education requirements go by various names. The courses may be called any of the names on this list.

1st Bankruptcy Course (Taken BEFORE filing bankruptcy)

-Pre-filing Course -Credit Counseling

2nd Bankruptcy Course (Taken AFTER filing bankruptcy)

-Debtor Education -Pre-Discharge Course -Financial Management -Post-Filing Course

Here’s what each of them mean so you can understand the concept of why they’re calling the program by these titles; this makes it easier to understand.

• 1st Bankruptcy Course - Pre-Filing; Credit Counseling Course: If you are taking the pre-filing course (typically required to file bankruptcy), the counselor must analyze your current financial situation, discuss factors that caused that condition, and assist in developing a plan to respond to those problems without incurring negative amortization of debt. The credit counseling provider must be a nonprofit provider, and be approved by the United States Trustee program or the Bankruptcy Administrators in Alabama and North Carolina. The credit counseling session takes roughly 60-90 minutes.

• 2nd Bankruptcy Course - Debtor Education; Financial Management; Post-Filing Course: The purpose of this course is to help instruct you on how to manage your finances and use credit wisely after you have filed for bankruptcy. They want to make sure you can have a fresh start after your bankruptcy is over. The course provider must also be approved by the United States Trustee program, or the Bankruptcy Administrators in Alabama and North Carolina. The debtor education provider takes a minimum of 2 hours or 120 minutes to complete. All providers have the same time requirement.

BE Adviser, LLC is approved in all U.S. States and Territories and not every provider is, so it is important to check.

When Will You Need To Participate In Debtor Education?

You have a window of one hundred and eighty days prior to the bankruptcy filing. This leaves time to get prepared and arrange the schedule to accommodate the course dates.

Where Can You Find An Approved Program?

BE Adviser is approved everywhere, our certificates are accepted by all attorneys and in all courts, and most of the top attorneys recommend us, so you are welcome to sign up with us. We also have a secure web site and are safe to take the course through. Below you can find links to other approved providers as well.

1st Bankruptcy Course (Credit Counseling) US Trustee Approved Providers

Alabama

Northern District

Middle District (PDF)

Southern District

North Carolina

Eastern District (PDF)

Middle District

Western District

2nd Bankruptcy Course (Debtor Education) US Trustee Approved Providers

Alabama

Northern District

Middle District (PDF)

Southern District

North Carolina

Eastern District (PDF)

Middle District

Western District

If you’re using a credit counseling organization you must make sure it is a non-profit and approved organization. The debtor education course does not have to be provided by a nonprofit but it does have to be approved. If they aren’t on the list above then don’t risk it.

In What Form Can The Bankruptcy Courses Be Taken?

Today, there’s good news for busy people with real lives. Depending upon which service you use, the choices are: in person, over the phone; or over the internet.

This ensures that regardless of the schedule the person filing has, it’s very possible to find a program and course that fit into their everyday life.

If the petitioner is having an issue with obtaining credit counseling then they must state why on the petition for bankruptcy.

This won’t be easy, even in the case of having the life events like eviction, repossession, etc. which may have brought them to bankruptcy in the first place.

In this case, you must explain, not only the reason for the delay in participation but the reasons why, as well as the name of the agency handling your case and contact information. They don’t make any concessions for excuses with no plausible explanation or means to verify.

There are exceptions to participation but the petitioner will have to have section 4 of exhibit D filled out. And in fact, if the petitioner actually qualifies for such an exemption, they’ll have to have a proxy to fill out the paperwork.

Why? The reason is because the petitioner would have to be mentally or physically incapacitated to the point that they could not participate in the credit counseling requirement at all–not on the internet, by phone or in person.

The only one exception is military personnel on active duty. This also must be proven with government paperwork. So, for the most part, everyone that’s filing bankruptcy must participate and within the time allotted.

What To Expect Once The Debtor Education Requirement Is Completed

Once the debtor education is completed, there’s things that must be done and the courts are quite precise about how they want it done. When the debtor education requirement is satisfied, the agency you use will provide a certificate of completion.

To generate the certificate, the agency has to use the UST approved certificate generation system or CGS, so it may take a little time. The agency you use will tell you when to expect the certificate and by what means it will be delivered. BE Adviser is committed to issuing these as fast as possible, and many attorneys use us because we are extremely fast and reliable.

How To Obtain The Certificate of Completion

The nice thing about using BE Adviser is that they automatically e-mail the certificate to your attorney, and they make the certificate available in your account with 24/7 access so you can download it at any time.

After you are done with the course, you can download the certificate by logging into your account and downloading it from your profile page. If it says “Pending” it simply means our staff are working on connecting to the UST’s certificate generation system so we can create the certificate. It’s generally done within minutes during office hours, and on a rolling basis after hours.

Whichever agency you use, make sure that you provide the correct e-mail for your attorney. Attorneys typically prefer to receive your certificate by e-mail. If you provide an incorrect e-mail address, your certificate may not get delivered. BE Adviser works very hard to correct any mistakes made by our clients. If an e-mail bounces back to us as undeliverable, we will take steps to correct it, but it is better to avoid that problem by providing the correct e-mail in the first place.

Difference Between The Credit Counseling and Debtor Education Courses

The Credit Counseling course is required for all persons filing chapter 7 and chapter 13. However, there is another program that must be taken in these cases called the Debtor Education or Personal Financial Management Course.

This is a bit different but may confuse people because it sounds familiar. In fact, when petitioners find out they have to sit for yet another session, they think there’s a mistake or start asking why they have to take the credit counseling over. So, to save a lot of time and energy, we’ll explain the difference here.

While the Credit Counseling Course needs to be taken within 180 days prior to filing the actual petition, the Debtor Education Course must be taken and a certification of completion be awarded after the petition has been filed.

This program can also be called Personal Financial Management or Post-Filing Course and this is why people think that this is the very program they just got through taking.

As cumbersome as the whole process may be there is a reason for both bankruptcy courses. In fact, it’s done separately, not only to satisfy the courts but to make sure the petitioner is not confused and understands what’s expected of them going forward.

The first Credit Counseling Course takes the form of a session with an approved credit counselor. This deals with the present debt, and the reasons that caused that debt. It is also not presumed that you will necessarily file bankruptcy if you take the credit counseling. Anyone in financial trouble can take it, even if you do not have an attorney. Not everyone who takes credit counseling decides to file bankruptcy, although many do.

Student loans and other types of debt that may not be eligible to be discharged in bankruptcy still have to be managed. And taking the course shows the court that you are capable to use prudent money management skills.

Think about it this way: if you are filing bankruptcy because you have a financial mismanagement issue, then guess what? Best that you get together with a trained credit counseling professional and get it resolved. This is done in several ways but are not limited to these choices. The last thing you want to do is file bankruptcy and get a fresh start, only to end up in a similar situation soon after.

What Can You Expect From Each Course?

In this last section, we’ll explain what you can expect from each session and offer some tips so you’re prepared fully for the process.

COURSE ONE: THE CREDIT COUNSELING COURSE

Don’t worry, this session is completely confidential, so answer their questions honestly. Many clients become embarrassed or guarded when asked about their financial situation, but the counselors are only there to help. They typically will discuss your budget and your current assets and debt, and how you got in debt trouble in the first place. This means the credit counseling professional will take stock of your current debt. For this, you will need to do these things typically but not limited to the below list:

  • Make a list of everyone you owe that they have told you, you can’t add to the bankruptcy.
  • Gather all your statements of credit cards and any bill you can’t bankrupt. If you do things online, just print them up.
  • Get together a budget on paper as well as you can. You will need your expense report whether you’re an individual or a company. They will discuss what you can cut back on and discover where the majority of expense is coming from.
  • Get your pay stubs or profit reports together. The income is very important to compare against the current debt that you’re left with. Because now, it must be handled.

COURSE TWO: THE DEBTOR EDUCATION COURSE

Now after the first course is done and the current debt is sewn up and you’re clear about how to deal with it, the second course begins after the petition for bankruptcy is submitted and accepted. You will receive a case number either from the bankruptcy court or from your attorney. You will need this case number in order to register online for the second course.

The second session is focused on budget planning for after bankruptcy. After the bankruptcy resolves many of your debts, you need to make a plan moving forward to avoid getting into the same situation again. Even if poor financial management was not an issue that caused your bankruptcy (lost your job, had a divorce, or had unexpected medical bills), it helps immensely to plan for the future.

Bankruptcy can last on a public record for no less than 7 years. During this time, typically the petitioner will be credit and financially restrained. You definitely do not want to get into a situation where you are incurring more debt after your bankruptcy is over, and threatening your fresh start.

This is the reason why the second course is even more important. These are the things you’ll need for that but not limited to the things that are on the list:

  • The expense report you brought to the first session
  • The clean list of the cutbacks you made within session one
  • Most important expenses that you’ve discussed in session one with the debt counselor.

With these revisions that were made in session one, a new plan is made for exactly what will and will no longer be done with your personal finances. This is meant to establish a healthy attitude and relationship with money. The rest of the course is mostly reading and answering simple questions. There is no way to fail either of the courses, so do not worry about failing or screwing them up. Just be as honest as you can and do the best job you can.

Conclusion

The final tips we can give you to be ahead of the game is this: Be sure to get everything you need gathered and organized regarding your finances. You may receive a list from the people you’ve chosen to handle your case but extra research doesn’t hurt.

Keep the lines of communication open with the bankruptcy court or your attorney or approved agency and ask as many questions as you feel you need. Follow up with them and submit forms and gather the paperwork they request in a timely manner.

The debtor education process as a whole goes much smoother and efficiently if you are proactive. Any form of financial education stands to be a benefit and the key to a better future where you can enjoy your money with less stress. You will get more out of it if you go into it with a positive attitude.

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