Failure to complete Credit Counseling can Wreck Your Case

Drawer of Shame

In bankruptcy, either Chapter 7 or 13, there is a counseling requirement – one  course that must be taken before the case is filed and another that must be taken before the case can be discharged.

One of the things that keeps me awake at night is the possibility that one of my clients might miss the deadline for the second course and have their discharge refused as a result.  I ask my clients to please have the second course done by the time of the meeting of creditors, which is about a month after filing.

If the second course is not done by then, I keep track of that fact by moving the file to my “drawer of shame.”  It has a big label on it in red letters.  My goal then is to bug those clients until the second course is done.  It would be a terrible shame to have a case that is otherwise going well fail because of that.  One time it was actually down to the last 24 hours before my client got it done.  That one had me actually calling my client’s mother.

I’ve never had a case where a client has actually missed the deadline.  The lawyers I know who have clients that have missed it tell me that every one of them blames the lawyer, even though the lawyer sent all kinds of reminders.

"Avoid Bankruptcy" add on the radio this morning

The radio add starts out with a dramatization of a phone call where a job applicant is being asked about a bankruptcy by a prospective employer. Then the announcer cuts in and starts talking about avoiding bankruptcy by going to whoever was sponsoring the add. This angered me because I have never had a client complain to me about receiving such a call; and I hear lots of complaints about lots of things.

The bankruptcy statute has provisions prohibiting discrimination by employers because a person has filed a bankruptcy. My understanding of those provisions is that they prevent a current employer from changing employment status because of a bankruptcy filing. It is also my understanding, however, that they do not prevent a future employer from taking the filing into account. So at least in theory, a call like the one in the add is possible. I just don’t know anyone who it has ever happened to.

I do know people who have spent great amounts of cash on various debt management or debt consolidation schemes, only to ultimately wind up in my office doing a bankruptcy. When I am asked about where to go for credit or debt management counseling, I always say to avoid any outfit that you hear advertising on the radio, TV or other media. The best places to go are the nonprofit organizations such as Lutheran Social Services or Family Means. There are lots of crooked or questionable debt counseling operations. It is possible that they could do a lot of good, but great care should be taken in selecting such a service. If I were you I would avoid any service which does not have an office in Minnesota.

Just ventilating here. I think the add is way inappropriate.

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