CBS CBS Consumer Bankruptcy & Debtor Education 1 — Questions and Answers
Question 1: Under BAPCPA 2005, what is the mandatory pre-bankruptcy credit counseling requirement for consumer debtors?
- Debtors must complete credit counseling from a U.S. Trustee-approved agency within 180 days before filing (Correct answer)
- Debtors must complete 8 hours of financial literacy courses at least 30 days before filing
- Debtors must attend a counseling session conducted by the bankruptcy court clerk
- Debtors must complete counseling only if their income exceeds the state median
Correct answer: Debtors must complete credit counseling from a U.S. Trustee-approved agency within 180 days before filing
BAPCPA requires individual debtors to complete credit counseling from a U.S. Trustee-approved nonprofit agency within the 180-day period before filing the bankruptcy petition.
Question 2: When must the post-filing debtor education course in personal financial management be completed?
- Before the debtor receives a discharge (prior to all plan payments in Chapter 13, or before the discharge order in Chapter 7) (Correct answer)
- Within 30 days of filing the bankruptcy petition
- Within 60 days after the Section 341 meeting of creditors
- After the discharge order is entered in both Chapter 7 and Chapter 13 cases
Correct answer: Before the debtor receives a discharge (prior to all plan payments in Chapter 13, or before the discharge order in Chapter 7)
Under 11 U.S.C. § 727(a)(11) and § 1328(g), completion of the financial management course is a prerequisite to receiving a discharge, not something done afterward.
Question 3: Which federal agency is responsible for approving credit counseling and debtor education providers under BAPCPA?
- The U.S. Trustee Program (USTP) within the Department of Justice (Correct answer)
- The Consumer Financial Protection Bureau (CFPB)
- The Federal Trade Commission (FTC)
- The National Foundation for Credit Counseling (NFCC)
Correct answer: The U.S. Trustee Program (USTP) within the Department of Justice
The U.S. Trustee Program, a component of the DOJ, maintains the official lists of approved credit counseling agencies and debtor education providers for each judicial district.
Question 4: Under what circumstances may a debtor obtain a waiver of the pre-bankruptcy credit counseling requirement?
- Exigent circumstances that prevented the debtor from obtaining counseling before an emergency filing was required (Correct answer)
- When the debtor previously received a bankruptcy discharge within the past 8 years
- When the debtor's total unsecured debt is below $10,000
- When the debtor is represented by a licensed bankruptcy attorney
Correct answer: Exigent circumstances that prevented the debtor from obtaining counseling before an emergency filing was required
A bankruptcy court may grant a temporary waiver of the credit counseling requirement if the debtor demonstrates exigent circumstances that made timely completion impractical before an urgent filing.
Question 5: What must the mandatory pre-filing credit counseling session include?
- An evaluation of the debtor's financial situation and a discussion of available alternatives to bankruptcy including debt management plans (Correct answer)
- A review of the debtor's credit report and FICO score analysis
- A live negotiation session between the debtor and each major creditor
- A legal analysis of which bankruptcy chapter the debtor should file under
Correct answer: An evaluation of the debtor's financial situation and a discussion of available alternatives to bankruptcy including debt management plans
Per BAPCPA, approved credit counseling must include a budget analysis, evaluation of the debtor's current financial situation, and discussion of alternatives to bankruptcy such as debt management plans.
Question 6: Which official form is filed with the bankruptcy court to certify completion of the pre-bankruptcy credit counseling requirement?
- Official Form 423 (Certification About a Financial Management Course) (Correct answer)
- A notarized letter from the credit counseling agency
- IRS Form 982 documenting the debtor's financial condition
- Official Form 101 (Voluntary Petition for Individuals Filing for Bankruptcy)
Correct answer: Official Form 423 (Certification About a Financial Management Course)
Debtors must file Official Form 423 (or the counseling agency's certificate) with the court to prove compliance with the pre-filing credit counseling requirement under 11 U.S.C. § 521(b).
CBS CBS Consumer Bankruptcy & Debtor Education 1
Under BAPCPA 2005, what is the mandatory pre-bankruptcy credit counseling requirement for consumer debtors?