Exceptions to Credit Counseling Course Requirement in Bankruptcy

The Credit Counseling Requirement in BankruptcyOne of the requirements for filing a petition with the Bankruptcy Court is to take a credit counseling course. Under Title 11 U.S.C. Section 521(b) debtors are require to file with the court a certificate from the approved nonprofit budget and credit counseling agency, which must have been completed within 180 days before the filing of your petition.

The purpose of the credit counseling course is to tell you if you really need to file for bankruptcy or whether there is an alternativeoption available to the individual, such as an informal repayment plan.However, you may temporary waive the requirement of the credit counseling course if any of the following exceptions apply:

  • The US Trustee or bankruptcy administrator determines that no courses are available in your district. The credit counseling course may be taken in person, over the phone or online, which makes this exception unlikely to happen. Also, you can obtain a list of U.S. Trustee approved credit counseling agencies from the Clerk’s Office or from the U.S. Trustee website.
  • Incapacitated, disability or active military duty in a combat zone pursuant to 11 U.S.C Section 109 (h)(4). You may waive the credit counseling requirement for someone who is incapacitated due to incapacity, disability, or active military duty in a military combat zone. If you claim to be incapacitated, you must show that you suffer from a mental illness or impairment and not capable of understanding or making rational decisions about your finances. Disability means that you have a physical impairment that physically prevent you from completing the course by any of its available resources.
  • “Exigent circumstances” exception. This exception allows an extension for you to obtain the required credit counseling after the filing of the casewhen you have to file bankruptcy immediately to avoid substantial, immediate harm. You must meet a three part test to claim exigent circumstances. First, you must describe the exigent circumstance meriting a waiver of the credit counseling requirement. Second, state thatyou have contacted an agency that provides the credit counseling coursebut wasunable to obtain the services within 7 days after contacting the agency. Third, the request must be satisfactory to the court. Yet, you will be required to complete the course within 30 days of filing bankruptcy, but the court, for cause, may grant additional 15 days depending on the circumstances of each debtor.
  • The Debtor is not an Individual, 11 U.S.C Section 109 of the Bankruptcy Code defines who may be a Debtor in Bankruptcy. A municipality or a Corporation may be deemed not to be an Individual, and therefore, exempt from the Credit Counseling Certificate Requirement.

If you file your petition without obtaining a credit counseling certificate and you do not qualify for any of these exceptions your case will be dismissed and you will not receive a discharge of your debts.

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