The Debtor Education Requirement in Bankruptcy

Before your debts are discharged in bankruptcy, you must take a personal financial management course.

After filing for Chapter 7 or Chapter 13 bankruptcy, you must complete a course on personal financial management before you can receive your bankruptcy discharge. If you filed a joint petition, both you and your spouse must complete the course. This course is often referred to as Debtor Education or Predischarge Counseling.

Why Is the Debtor Education Class Important?

If you don’t complete the debtor education course within the required deadlines, the court will close your case and you won’t get a discharge, which means you will remain liable for you debts.

You must also complete a credit counseling course  before  you file for bankruptcy. These two requirements are separate (you must do both). To learn more about the prebankruptcy class, see  The Credit Counseling Requirement in Bankruptcy.)

What to Expect from the Debtor Education Course

You must take the debtor education course from a court approved personal financial management provider. The U.S. trustee’s office maintains a list of court approved debtor education providers. (You can find a list of these providers on the  website of the U.S. Trustee. Choose your state from the dropdown list.) Many of these providers allow you to complete the debtor education class online, over the phone, or in person. Some providers offer the course in different languages as well. (Learn more about  getting debtor education in a language other than English.)

The class itself typically lasts about two hours, and provides information on such topics as:

  • setting and reaching financial goals
  • saving money
  • money management
  • preparing a budget
  • consumer protection
  • ways to cut expenses
  • using credit wisely and effectively, and
  • dealing with an unexpected financial crisis.

Paying for the Course

Generally, there is a fee for the course, which can range from $5 to $100, depending on the provider. Co-filing spouses can complete the class together for a single fee.

If you can’t afford the fee, most providers offer fee waiver or fee reduction. Reduced fees and fee waivers are available to applicants whose income is below 150% of the Federal Poverty Level for their household size (you can find these numbers at the U.S. Department of Health and Human Services). If your attorney didn’t charge you any fees for his or her services (pro bono or legal aid), most providers will not charge you for the debtor education course.

Filing the Certification of Completion with the Court

Once you complete the class, you will receive a certificate as proof. In most instances, there is no separate charge for the certificate. Once you get the certificate, you must file Official Form 23 with the Court – this is also called the Certification of Completion. In it, you tell the court that you have completed the course. In some courts you must also file the certificate. If you don’t file the certification of completion, you will not receive your bankruptcy discharge and the court will close your case.

Deadlines for Completing the Course

Here are the time limits for completing the course:

Chapter 7.  If you filed a Chapter 7 bankruptcy, you have 60 days after the first date set for the meeting of creditors to complete the debtor education course and file the certification of completion with the court.

Chapter 13.  If you filed a Chapter 13 bankruptcy, you must complete the class and file the certification of completion prior to your last plan payment.

If you miss these deadlines, you can reopen your case, for a fee, in order to complete the class and file your certification of completion.

Exceptions to the Debtor Education Requirement

While the general rule is that all debtors must complete a debtor education course prior to receiving a bankruptcy discharge, there are a few exceptions. The court may waive the requirement if:

  • there are no court approved course providers available in your area
  • there is not a course available in a language you understand
  • you have an incapacity or disability that prevents you from being able to take the course, or
  • you are on active military duty in a military combat zone.

Unless one of these rare exceptions apply, you must comply with the debtor education requirement.

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