Failure to Compete Financial Management Course and Denial of Discharge

Sometimes debtor’s bankruptcy case ban be closed without a discharge. The most likely reason for this the debtor’s failure to complete the financial management course. As a part of BAPCPA, the Congress required that every debtor to complete a financial management course before receiving a discharge in bankruptcy. This requirement applies to both Chapter 7 Bankruptcy and Chapter 13 Bankruptcy cases.  The class completion certificate must be filed with the court no later than 60 days following debtor’s meeting of creditors (otherwise known as 341 meeting). The certificate is usually filed with Form 23 which provides additional information to the court regarding completion of the course. If the debtor does not complete the course on time, and the bankruptcy attorney could not file the certificate, the bankruptcy court will close the case without discharge.

This is really the worst outcome possible in a bankruptcy case since the petition and all of the work done on the case was done for nothing. When the court closes the case without discharge, the automatic stay ends, and there is no discharge protecting debtor and his income and assets from his creditors. If the case is closed without discharge, creditors can begin calling and sending letters once again.

However, if the court closes the case without discharge, this problem can be solved. The debtor need to immediately do the following: complete the financial management course and then have his attorney prepare Form 23, and file it with the court. Additionally, debtor’s bankruptcy attorney will need to prepare and file a motion to reopen the bankruptcy case. The debtor and his attorney will need to appear at the motion. Once the motion is granted by the judge, bankruptcy attorney will have to submit an order for the judge to sign granting reopening of the case.

If the error in not filing the certificate of debtor education is on the part of the bankruptcy attorney, then the attorney should pay the filing fee and assume the fees for the motion and the hearing.  If the mistake was on the part of the debtor, the debtor should be prepared to pay the filing fee, fees to the attorney for drafting and filing the motion to reopen the case, and for his time to attend the motion.

In my experience, this is one problem that is extremely easy to avoid. In my practice, I calendar the 60 day deadline and start calling my clients who have not provided me with a certificate within 45 days after the meeting of the creditors. Debtors should not wait until the last minute to complete the financial management course since they can do it anytime after the case is filed. That way you avoid the notice that you had your bankruptcy case closed without discharge.

If you are contemplating filing Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, or are dealing with debt problems in Western New York, including Rochester, Canandaigua, Brighton, Pittsford, Penfield, Perinton, Fairport, Webster, Victor, Farmington, Greece, Gates, Hilton, Parma, Brockport, Spencerport, LeRoy, Chili, Churchville, Monroe County, Ontario County, Wayne County, Orleans County, Livingston County, and being harassed by bill collectors, and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation with a Rochester, NY, bankruptcy lawyer.

Debtors Get More Time to Take Personal Financial Management Course

One of the basic procedural requirements that the debtors have to satisfy before receiving their discharge in Chapter 7 Bankruptcy and Chapter 13 Bankruptcy is completing the personal financial management course.

Starting on December 1, 2010, the new rules went into effect giving the debtors in Chapter 7 Bankruptcy 60 days to file a statement of completion of a course in personal financial management.  The statement of completion is also known as Official Form 23.

After December 1, 2010, debtors must complete the course within 60 days from the first date set for the meeting of creditors, also know as 341 Hearing. This is an increase of 15 days, up from the prior 45 day time limit.

If debtors fail to satisfy this requirement, they are denied a discharge of their debts.  If debtors do not receive their discharge, their bankruptcy was not successful in discharging their debts, and they will not be able to file for bankruptcy again for a long time.

The rules for individuals in Chapter 13 cases were not changed, and still provide that the personal financial management course has to be completed no later than the date when the last payment was made by the debtor as required by the plan or the filing of a motion for discharge.

If you are contemplating filing Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, or are dealing with debt problems in Western New York, including Rochester, New York, Canandaigua, Brighton, Pittsford, Penfield, Perinton, Fairport, Webster, Victor, Farmington, Greece, Gates, Hilton, Parma, Brockport, Spencerport, LeRoy, Chili, Churchville, Monroe County, Ontario County, Wayne County, Orleans County, Livingston County, and being harassed by bill collectors, and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation with a Rochester, NY, bankruptcy lawyer.