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What is debtor education and why do I need to take it?

When you file for personal bankruptcy, you should be aware that you will have to take two types of courses: credit counseling and debtor education. Credit counseling must be completed in the 180 days prior to your filing.

The Federal Trade Commission points out that before your debt can be discharged, you must complete a debtor education program. During the course, you will learn about topics regarding your life after bankruptcy that include the following: 

  • Money management
  • Prudent credit use
  • Budget development

According to the FTC, the class will probably last about two hours and can be completed either in person, online or even over the phone. While there is a cost to the session – approximately $50 to $100 – the FTC points out that you can ask that the fee be waived if you cannot afford it.

The U.S. Department of Justice must approve the debtor education course provider in order for it to satisfy the requirements of your personal bankruptcy filing. The DOJ has a list online where you can find approved entities in Washington, D.C.

If you file for Chapter 7, you only have 60 days from the date of your 341 hearing to complete the course. If you file for Chapter 13, you must complete the course before you make the last payment according to your plan. Once you finish the course, you will receive a certificate that must be filed with the court where you filed for bankruptcy in order for your debt to be discharged.

While this information may be useful, it should not be taken as legal advice.

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