Failure to Compete Financial Management Course and Denial of Discharge

Sometimes debtor’s bankruptcy case can be closed without a discharge. The most likely reason for this is the debtor’s failure to complete the financial management course. As a part of BAPCPA, Congress required that every debtor 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 the debtor’s meeting of creditors (otherwise known as 341 meetings). The certificate is usually filed with Form 23 which provides additional information to the court regarding the 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 a discharge.

This is really the worst outcome possible in a bankruptcy case since the petition and all of the work done on the case were done for nothing. When the court closes the case without discharge, the automatic stay ends, and there is no discharge protecting the 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 needs 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, the 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, the bankruptcy attorney will have to submit an order for the judge to sign granting the 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, and 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 a 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.

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