Every consumer bankruptcy requires two short online courses from providers approved by the U.S. Trustee. The credit counseling course comes first, and its certificate must be dated within the 180 days before filing. The debtor education course comes after filing and must be finished before discharge. Each runs about an hour and costs roughly $15 to $50.
Two courses, two deadlines, two very different consequences
Congress added these requirements in 2005 on the theory that people filing bankruptcy should get a lesson in budgeting on the way in and on the way out. Whatever you think of the theory, the courses are mandatory, and the case cannot be filed without the first or closed with a discharge without the second.
They're similar in format: a website, a series of screens about budgeting and credit, a short quiz, a certificate emailed to you (and to us) at the end. Most people finish in 60 to 90 minutes. Some providers offer a phone option, and a few still do it in person, but for Los Angeles clients the online version is the sensible one.
The difference is in what happens if you skip them. Miss the first and the case gets dismissed, usually within days. Miss the second and the case closes without a discharge, which means every debt you filed to eliminate is still owed, and reopening the case to fix it costs a court fee many times what the course would have.
The first course: credit counseling, before filing
The credit counseling briefing has to be completed before the petition is filed, and the certificate can't be more than 180 days old on the filing date. It's from an agency on the U.S. Trustee's approved list for the Central District. We send clients a link to one we've used for years; the choice is yours as long as the provider is on that list.
The session asks about your income, expenses and debts, and produces a certificate and, sometimes, a suggested repayment plan that you're free to ignore. The plan is a formality. Nobody expects it to be viable, and the provider is required to produce one whether or not it makes sense.
Timing matters two ways. Do it too early and it expires: a certificate from March is no good for a September filing. Do it too late and it holds up an emergency. When a client calls with a foreclosure sale on Thursday or a repossession truck expected tonight, the credit counseling course is often the slowest step in getting the case on file, because it's the one thing only the client can do. If you think you'll be filing in the next few months, doing the course early in that window costs nothing and removes a bottleneck. Book a free consultation first, though, so the certificate isn't wasted on a case that shouldn't be filed.
Joint filers each complete it separately, each gets a certificate, and both certificates go in with the petition.
The second course: debtor education, before discharge
After the case is filed, and usually right after the 341 meeting while it's fresh, you complete the debtor education course, sometimes called the financial management course. Same idea, different content: budgeting after bankruptcy, rebuilding credit, avoiding the pattern that led here.
The deadline is where people slip. In a Chapter 7, the certificate has to be filed with the court within 60 days after the first date set for the 341 meeting. That's the same window the trustee and creditors have to object, and it closes at the same time. In a Chapter 13, it has to be filed before you make your last plan payment, which is years away and easy to forget, which is why our office calendars it at confirmation and again near the end.
The certificate is filed on Official Form 423, and we file it for you as soon as the provider sends it. What we can't do is take the course for you. If you've moved and stopped checking email, or the reminder went to spam, the 60 days can run out quietly.
What they cost, and what happens if you can't pay
Providers set their own fees within a range the U.S. Trustee reviews. Most charge between $15 and $50 per course, per person. A few bundle both courses at a small discount. Payment is by card on the provider's site, and it's not part of our attorney fee.
| Course | When | Typical cost | Time | If missed |
|---|---|---|---|---|
| Credit counseling | Within 180 days before filing | $15 to $50 | About an hour | Case dismissed |
| Debtor education | After filing; Chapter 7 within 60 days of the first 341 date, Chapter 13 before the final plan payment | $15 to $50 | About an hour | Case closes without discharge |
Approved providers are required to offer the course free or at a reduced fee to people who can't afford it, generally using an income test around 150% of the poverty guidelines, the same threshold the court uses for the Chapter 7 filing fee waiver. Ask the provider directly; the option is usually a form on their site, not something they advertise. Compared with the rest of the cost of filing bankruptcy in Los Angeles, the courses are a rounding error, but nobody should skip one over $30.
Who's exempt, and who isn't
Almost nobody, in practice. The Code excuses the credit counseling requirement for debtors who are incapacitated, disabled to the point of being unable to participate, or on active military duty in a combat zone. It also allows a short deferral, up to 30 days, where the debtor requested counseling from an approved agency and couldn't get it within seven days before an emergency filing, which we've used for a foreclosure filed on a Friday afternoon when every provider's phone line was jammed. The court grants those sparingly and expects the course to be finished promptly afterward.
What doesn't excuse you: being busy, not having a computer, having taken a similar course for a prior bankruptcy years ago, or not speaking English. Providers offer the courses in Spanish and often in other languages, and a phone session solves the computer problem.
Doing it right the first time
Use the link we send, not a search result. There are sites that charge $80 for a course that isn't approved in this district, and the certificate is worthless. Enter your name exactly as it appears on the petition; a certificate for "Mike" when the petition says "Michael" gets questioned. In a joint case, don't let one spouse take both courses under both names. It's been done, and it's a false statement to the court. Forward us the certificate the day it arrives, or confirm the provider sent it to us. And if we call about the second course in the weeks after your 341 meeting, that's not us being fussy. That's the 60-day window, and the discharge is on the other side of it.
the one that still bothers me was years ago: a clean no-asset case, a good 341, no objections, and a discharge that never issued because the client changed his phone number and email after filing and never saw the reminders about the second course. The case closed. He came back fourteen months later when a collector resumed calling on a debt that, legally, hadn't been discharged. Reopening cost a court fee, a motion, and weeks of waiting, all to file a certificate for a $20 course. We call and text now, and then we send a letter. Nobody should lose a discharge to a spam filter.
Questions people ask about this
Can I take the credit counseling course after filing bankruptcy?
No, except in a narrow emergency exception where you requested it from an approved provider and couldn't get it within seven days before filing. Otherwise the certificate has to predate the petition, and a case filed without it is dismissed. Do it before you file, and within 180 days of the filing date.
What happens if I don't take the debtor education course?
In a Chapter 7 the case is closed without a discharge once the deadline passes. Your debts remain owed. Reopening the case to file the certificate requires a motion and a court reopening fee that far exceeds the cost of the course. In a Chapter 13, the discharge won't issue at the end of the plan until it's filed.
Do both spouses have to take the courses in a joint case?
Yes, each spouse separately, each with their own certificate for each course. Some providers let a couple take it together on one session but still issue two certificates. Taking it once under both names is a false filing.
Is the course hard? Is there a test?
There's a short quiz, and providers are required to let you retake it. Nobody fails out. The material is basic budgeting and credit information. Most people finish in an hour, some in less. The point is completion, not a grade.
Can I use any online bankruptcy course I find?
Only providers approved by the U.S. Trustee's office for the Central District of California count. A certificate from an unapproved site is rejected, and you'll have to do it again with an approved one. Use the link we send or check the U.S. Trustee's published list.
Talk it through with the attorney
If you're thinking about filing in the next few months, call (310) 555-0184 and we'll send you the course link along with a free video consultation. Getting the first course done early means the case can be filed the day it needs to be.