Lately I have seen an increasing number of clients failing to perform all the necessary requirements to receive a discharge (discharge is the process of getting rid of your debt) in both Chapter 7 and Chapter 13 bankruptcies. Most Chapter 7 bankruptcies are quite straight forward. You take a credit counseling class before you file, either over the phone or via the internet. You provide your attorney with all the information he/she needs to file your bankruptcy, you attend one hearing, and then lastly, before receiving your discharge, you have to take a financial management class. All of these things must happen in order to receive a discharge.
Unfortunately, some people pay for a bankruptcy, they get just about all the way through, and then they forget one simple thing: taking their financial management class. This basically ruins the whole case. A discharge is not received and creditors can once again begin harassing you and trying to collect from you. This class is very cheap, not time consuming, and yet an essential part of the bankruptcy process. Too many times now I have seen former Chapter 7 clients forget this last part of their bankruptcy only to start getting garnished several months later. To fix the problem, they have to then reopen their bankruptcy and beg a judge to allow them to take this class late.
Reopening can be expensive, and getting a judge to agree can be quite the hassle. I don’t know how many times I stress to people to take the class, and yet still see them fail to do so. Not only do I remind them, but the court itself sends out a reminder. Now, I understand, you may have moved. You may no longer be reachable at the address you used in your petition for bankruptcy. No matter. You should ALWAYS inform your attorney of any new addresses.
This problem is even worse in Chapter 13s. In a chapter 13 bankruptcy, the debtor (person filing bankruptcy) spends three to five years paying off some of their debt, knowing that what they can’t pay will be discharged at the end. However, again, the financial management course must be taken before the discharge. It breaks my heart to see a client work hard for five years, make all their required payments, and then forget to take the financial management class and have their case dismissed without the benefit of a discharge. I’ve seen judges who are loath to allow them to reopen their case after making this oversight. In a Chapter 13, not only do I tell my clients about the financial management class many times, along with the court itself, but during the first bankruptcy hearing, the Chapter 13 trustee even informs everyone that he offers a FREE class that you can take at any time during your Chapter 13 plan. Still, people forget or just never manage to get the class taken. It’s very important to make sure you have fulfilled all of your duties when filing for bankruptcy. Don’t forget, TAKE A FINANCIAL MANAGEMENT CLASS. It will save you a lot of heartache at the end of the day.
For more information on bankruptcy, see our page on bankruptcy.