In an interview on WBZ-1030AM Radio in October, I was asked if I thought the changes in the bankruptcy laws were “fair.” My response: “ask me in a year.” Well, the Bankruptcy Abuse Prevention and Consumer Protection Act is here. As Gene Wilder gleefully shrieked in Young Frankenstein, “IT’S ALIVE!” One of the most important new requirements under the law is the need for get a "ticket" to the bankruptcy court. It's not worth shrieking about, but it is worth making sure that consumers contemplating filing bankruptcy know about it.
Under the new bankruptcy laws, a consumer debtor must complete “budget and credit counseling” before filing a bankruptcy petition. The consumer must file a certificate of completion from a nonprofit budget and credit counseling agency approved by the US Trustee. Consumer bankruptcy attorneys are routinely referring to this certificate as the “ticket” to bankruptcy court. Counseling may be available on the phone, in person or over the internet depending on the agency. The costs of this counseling are the consumer’s responsibility. Fair or not, it’s a requirement that all consumer bankruptcy debtors need to abide by.
The problem we attorneys are consistently seeing lies with those waiting until the last minute to file bankruptcy. Procrastination is now a luxury that virtually all debtors cannot afford. While there might be circumstances that might enable a consumer to file bankruptcy without that “ticket”, BAPCPA is still evolving in the courts and frankly, there is no clear exception to the credit counseling prerequisite.
Until exceptions to the requirement are set in stone, if they ever are, consumers contemplating bankruptcy must assume that they will need to obtain that “ticket” before they can file. Perhaps more simply stated: plan accordingly. Consumers who wait until the eve of a foreclosure sale, or who call bankruptcy counsel as the repo man’s tow truck is pulling into the driveway might find themselves in an unpleasant and irreversible situation that could have been avoided. The time to speak to bankruptcy counsel – and to get that “ticket” - is well before then.
Is this new requirement fair? Ask me in October.
