Requirements to Take Pre and Post Filing Classes

Under the new bankruptcy law effective in 2005, a person filing for bankruptcy must take a credit counseling class before the case is filed and a debt management class after it is filed. These classes can be taken over the telephone or over the Internet. The pre-filing class usually takes 90 minutes to complete and the post-filing class usually takes two hours to complete. The companies that offer the courses must be approved by the U.S. Trustee’s Office. The fees charged by these companies range from $14.00 to $50.00 per course. Although I have heard of companies charging much more. If my clients use the companies I recommend, they will be paying the least amount for each course, thereby saving themselves a lot of money. When the debtor has completed the course, the company will issue a certificate that indicating that the person completed the course. The certificate will indicate the date and time the course was completed. The pre-filing certificate is good for six months. If the case is not filed within six months of the course completion, the person will need to take the class again. The bankruptcy court will give the debtor a deadline to complete the post-filing debt management class. If the debtor has not taken the class before the deadline, the court will close the case and no discharge order will be entered.

Section 1099(h) (4) of the Bankruptcy Code allows certain individuals to file cases and be granted a discharge without taking these classes. To be eligible under this section, the person must be “unable to complete those requirements because of incapacity, disability, or active military duty in a military combat zone. For purposes of this paragraph, “incapacity” means that the debtor is impaired by reason of mental illness or mental deficiency so that he is incapable of realizing and making rational decisions with respect to his financial responsibilities; and “disability” means that the debtor is so physically impaired as to be unable, after reasonable effort, to participate in an in person, telephone, or Internet briefing...”

I have had elderly clients who are incapacitated due to dementia be excused from taking the classes. However, prisoners, although the prison officials refuse to allow them to take the course, have been denied a waiver by the bankruptcy court and were still required to take the classes. The bankruptcy court has held in a recent case in Ohio, In re Denger, that a debtor’s incarceration, standing on its own, cannot be equated with a “disability” for purposes of Section 109(h)(4).

Laura J. Margulies is a principal in the firm of Laura Margulies & Associates, LLC. We represent consumers in bankruptcy and litigation matters in Maryland and the District of Columbia.