Bankruptcy is a much more complex process than simply filing and having your debts discharged or restructured. You will have to first complete many steps and one of those is obtaining a bankruptcy certificate or rather, two certificates. Bankruptcy certificates are documents that show you completed a credit counseling and a debt education course. These courses are separate from each other, and you will have to complete them at different times during the process.
You must have a bankruptcy certificate from a credit counseling course to file for bankruptcy, while you have to obtain a certificate from a debt education course after you have filed. Both courses are mandatory if you are pursuing bankruptcy protection. It is important to know about the companies that have the authority to issue bankruptcy certificates, so you can know what to expect before starting the bankruptcy process.
The Law on Bankruptcy Certificates
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 outlines the requirements of obtaining a bankruptcy certificate. As the name of the Act suggests, the requirements on bankruptcy certificates are intended to help ensure people are only filing bankruptcy when they really need to, and not to abuse the system. Adding the extra step of requiring bankruptcy certificates makes it a bit harder for people, ensuring only people in legitimate need of relief are filing. The bankruptcy certificates apply whether you are filing for Chapter 7 bankruptcy or Chapter 13.
Which Agencies Can Issue Bankruptcy Certificates?
It is important to only take a credit counseling course or a debtor education course from a company approved by the U.S. Trustee Program. These are the only companies authorized to issue bankruptcy certificates. If you are filing a joint bankruptcy with another person, you can attend the courses together, but you must each receive your own services. These courses are often individualized to help borrowers with their own situations and so, each party must receive this individual counseling. After you have each completed the course, you are then both given your own bankruptcy certificate to prove completion.
What Happens During Credit Counseling?
Credit counseling is meant to help you understand whether you actually need to file for bankruptcy, or whether you can get back on your feet financially through an informal repayment plan. Even if a repayment plan is not practical, such as if you have too much debt and not enough income, you must still attend credit counseling.
During counseling, a representative from the company will prepare a budget based on your income and expenses. They will then determine the options you have to repay the debt. In the majority of cases, the company will confirm that you cannot repay the debt and so, you should file for bankruptcy.
Under the law, you are only required to complete the counseling. You are not under any obligation to go through with the options the company provides you with. So, even if you can repay the debt, you can still choose to file bankruptcy instead. However, you must include any plan the company created with the other documents when you file for bankruptcy. If the court finds that you could also repay the debt, they may require that you file Chapter 13 bankruptcy instead of Chapter 7.
Credit counseling sessions usually last between 60 to 90 minutes. You can complete the course in person, over the phone, or even online. The fee for credit counseling is usually approximately $50. You must complete the credit counseling session within 180 days before filing for bankruptcy.
What Happens During a Debtor Education Course?
The debtor education course is not intended to determine if you can file for bankruptcy, which is why you will have to complete it after filing. Instead, this course is intended to help you manage your money and debts better once you have filed and after your case is final. During the debtor education course, you are given financial management tools, including how to rebuild your credit after bankruptcy and how to create a budget.
Like the credit counseling sessions, once you have completed the debtor education course, you will receive a bankruptcy certificate. You must file the certificate within 60 days of your first date of meeting with the creditors or the court will dismiss your case. The company that offers the course may file your certificate for you, so it is important to ask any agency what their process is so you can ensure your certificate is filed properly and in the appropriate amount of time.
Debtor education courses take a little longer than credit counseling sessions and they can last up to two hours. However, you can still complete the course in person, online, or over the phone. The cost for these courses is usually $50 to $100.
Fees for Bankruptcy Certificates
Bankruptcy law recognizes that anyone seeking a discharge or reorganization of their debts is struggling financially. As such, any company offering a credit counseling course or a debtor education course must disclose all of their fees upfront. While these companies are allowed to charge a fee for the bankruptcy certificate, they must inform you of this fee before the service.
It is possible sometimes to have the fees associated with these courses waived. You will typically only qualify for a waiver if your household income is less than 150 percent of the poverty level. If you qualify and are unable to pay, the companies are required to provide the service free of charge.
Our Bankruptcy Lawyers in Fort Lauderdale Can Help with Your Case
When filing for bankruptcy, there is a lot to know and you will have to take certain steps that many people are not aware of. At Loan Lawyers, our Fort Lauderdale bankruptcy attorney can advise you on what to expect, and help you through the entire process to give you the best chance of a successful outcome. Call our Florida bankruptcy attorney today at 954-807-1361 or fill out our online form to schedule a free consultation.
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Loan Lawyers is made up of experienced consumer rights attorneys who use every available resource to develop comprehensive debt solution strategies. Our goal is to take on those burdens, resolve those problems, and allow our clients to sleep soundly knowing they are on the path to a better future.
