When you file for Chapter 7 bankruptcy in New York, there are different obligations that you have to fulfill.
To begin with, you must make all of your financial information available for inspection, such as your income, assets, and liabilities, so that the Bankruptcy Court can determine the following:
- Whether or not you meet the means test for a Chapter 7 filing. If you have too much disposable income after meeting your family’s reasonable living expenses, then you may have to repay your debts in a Chapter 13 plan.
- If you have any nonexempt property that has to be surrendered to your trustee for sale and distribution among your creditors.
Another obligation is the completion of a debtor education course designed to set you up for financial success after your discharge by showing you how to avoid practices and behaviors that may have contributed to your current situation. You will have to take two courses: one before you file and the second before you get a discharge from your Chapter 7 bankruptcy. In this blog, we’ll review the rules surrounding the pre-filing course.
Note: If you have a disability or are an active-duty member of the U.S. military, then you may be exempt from taking the course before filing for bankruptcy. If this is the case, then your New York bankruptcy attorney can advise you on how to seek an exemption.
What do the courses consist of?
Both courses provide you with information about the following:
- How to create budgets
- Smart money management
- Careful and appropriate use of credit
- The laws and agencies dedicated to consumer protection
- How to deal with future financial challenges that could come up
Who offers these courses?
Various parties offer debt management courses, but you need to confirm that the provider you choose is approved by the U.S. Trustee Office. (Using an unapproved provider could result in your certificate being rejected.) You can find a list of approved providers for New York State residents here.
Do you have to attend in person?
Debtor education courses can be taken in the following ways:
- In person
- Online (usually done via email or live chat)
- Over the phone
In general, they last under two hours and rarely cost more than $25.
If you attend your debtor education course in person, then you will receive course materials and receive instruction in a class setting. If you opt to take it over the phone, then you will typically receive learning materials (e.g., a workbook or lesson sheets) to follow during the course.
Those who take the course over the phone or online will also have to complete a test. If you receive a score of less than 70%, then the instructor will call or email you to go over the answers you missed to ensure that you understand the correct responses.
When do you have to attend?
If you file for Chapter 7 bankruptcy in New York, then you need to take the debtor education course and file the certificate of completion with the court within 45 days after your scheduled 341 hearing, also known as the meeting of creditors. Chapter 13 filers must provide their certificate of completion before making their last plan payment.
If you don’t attend as required (or receive an exemption excusing you from taking the course) within the applicable deadlines, then the Bankruptcy Court will usually close your case without granting you a discharge. If this happens, then the only way to get a discharge from all your debts is to file a motion for the court to reopen your case so you can take the course and file the certificate. It’s an expensive outcome that can be avoided by taking the course when scheduled.
How much does the course cost?
The course cost will depend on which provider you use. The Executive Office for U.S. Trustees indicates that it considers a reasonable fee to be $50 or less. If a provider wants to charge more, then it has to get approval first. If your household income is under 150% of the poverty line, then you may be able to request a waiver of this course fee.
Filing your certificate of completion
When you complete the course, you must file a certification of completion with the court, along with the completion certificate you received from the provider. You can always find the most up-to-date U.S. bankruptcy forms and certificates here.
Contact a New York bankruptcy attorney
If you have questions about the debtor education class or any of the steps involved with filing for Chapter 7 bankruptcy in New York, then be sure to bring them up with your bankruptcy attorney. Your attorney will provide the advice you need to avoid mistakes that could jeopardize your discharge, so if you are uncertain about any aspect of the process, contact them for the right direction. Jayson Lutzky is a Bronx bankruptcy with over 37 years of legal experience. If you are considering filing for bankruptcy, then set up a free consultation with Mr. Lutzky. He can review your options with you and determine the best course to your financial freedom. Call 718-514-6619 to learn more.