If one picks up the MBTA Red Line at Downtown Crossing, less than a block from my office, one must pay $1.25 to board. If the rider takes the T to Quincy Adams or Braintree, another $1.25 must be paid to exit the station. While it’s never happened to me personally, I can only imagine that if one does not have the $1.25 to exit, they are left to board the train again and head back into the direction they came in. Under the new bankruptcy law, debtors need a ticket to file, a topic that I discussed on December 30. There is also the new requirement to obtain a ticket out of bankruptcy: Debtor Education.
Section 727 of the Bankruptcy Code was amended to provide that a debtor cannot receive a discharge if the debtor has “failed to complete an instructional course concerning personal financial management.” Once completed, a certificate of completion is filed with the Bankruptcy Court. Thus, in addition to credit counseling, bankrupt debtors must complete a post-filing course in financial management.
I believe that by the time the bankruptcy petition is filed, the debtor has already been through the emotional hell of realizing that bankruptcy is the best option for them; attended a mandatory credit counseling session; provided their attorney with many documents and records; and completed questionnaires and responded to numerous inquiries from their attorney. All of this preceded by months, if not years, of trying to struggle with unmanageable debt and to avoid bankruptcy all together.
Then, after they file, they attend a Section 341 creditors meeting. While any good bankruptcy attorney is going to properly advise a debtor what to expect in the meeting, none of that will alleviate a typical debtor’s fear of the unknown. Bankruptcy attorneys may have many cases and attend many creditors meetings. But most bankruptcy debtors have one case, and attend one meeting and it’s not uncommon for debtors to have a restless night’s sleep the night before.
However, despite an overwhelming urge to move on, their bankruptcy filing could be an exercise in futility if the debtor education course requirement is not fulfilled.
So the bottom line is that the requirement must be fulfilled. It is an additional cost that a debtor must bear, but it is a necessary step to obtaining that bankruptcy discharge. Like the Red Line in Braintree, it’s the ticket out of bankruptcy. Except it’s not as cheap as train fare to Braintree.
Is it fair? Is it even worth it? Time will tell.
