Before filing for bankruptcy, there was the credit counseling session. After filing, one must complete further debtor education in order to continue and succeed with the bankruptcy. What should you expect from this process? Learn more.
After a trustee in a Michigan bankruptcy case concludes a debtor’s 341 Hearing, which is the meeting of creditors, there is a financial education requirement the debtor must attend before a Chapter 7 bankruptcy discharge. The Eastern District of Michigan Bankruptcy Court’s local rules give Chapter 7 debtors 45 days after their initial meeting with the trustee to complete the debtor education course.
A bankruptcy discharge is wipes out debts that cannot be paid off by the bankruptcy estate assets. Some debts are not dischargeable like education loans. Before bankruptcy discharge, a Chapter 7 debtor must provide proof the debtor finished an instructional course relating to personal financial management from a provider approved by the Office of the US Trustee. The Chapter 7 bankruptcy debtor does not provide the proof to the trustee, but provides the proof to the bankruptcy court. After the meeting of creditors, all the debtor communications are to be with the court. The debtor files the evidence on completing the financial class with the US Bankruptcy Court where s/he filed the petition.
The post-filing debtor education requirement is not the same as the class the debtor took before filing bankruptcy. In addition to the credit counseling course a debtor completes before filing bankruptcy, the debtor needs to complete a personal financial management from a US Trustee approved provider. The FTC warns that bankruptcy credit counseling and pre-discharge debtor education may not be provided at the same time. The post-filing class teaches a debtor how to develop a budget, manage money, use credit. The typical fee is between $50 and $100, and the class may take two hours to finish.
If the debtor does not finish the counseling course, the court closes the bankruptcy case and enters a no entry notice of discharge. This means the debtor remains responsible for the debts as if s/he did not file bankruptcy. It is important to find a provider on the US Trustee’s website at www.usdoj.gov/ust because taking a class from an unapproved provider does not count. Before taking a class, the debtor should find out the following from the provider:
- What qualifications do counselors have? Are they accredited or certified by an organization? What training do they receive?
- What information the provider keeps about the debtor (including address, phone number, and financial information). Will the information be kept confidential and secure?
- How are the counselor’s employees paid?
For help with this and other requirements for a successful bankruptcy, consult a knowledgeable and efficient Detroit MI bankruptcy attorney. A Michigan bankruptcy lawyer can guide you to understand fulfill all that’s necessary for your financial fresh start.