A debtor must complete an instructional course in personal financial management in order to receive a discharge. This is commonly referred to as, the second credit counseling course.
Pursuant to Rule 1007(b)(7) of the Federal Rules of Bankruptcy Procedure, the debtor must complete and file a certificate for a Financial Management Course. The certificate for the financial management course must be filed before a discharge can be entered. Failure to file the certification will result in the case being closed without an entry of discharge. If the debtor subsequently files a motion to reopen the case to allow for the filing of the certificate, the debtor must pay the full reopening fee due for filing the motion.
Bankruptcy Code Section 350(b) states that "a case may be reopened in the court in which such case was closed to administer assets, to accord relief to the debtor, or for other cause." 11 U.S.C. § 350(b). A debtor who fails to file their second credit counseling course on time may then file a motion with the court to obtain an order granting the debtor a retroactive extension of time to file the Financial Management Course Certificate so the debtor can obtain a discharge.
It is well settled that the bankruptcy judge makes decisions regarding whether to reopen bankruptcy cases. The court may consider the details of each case, considering why the debtor failed to complete the course. The debtor has the burden of establishing that a "cause” exists to reopen this case.
The court will consider 4 factors when determining whether to reopen a case to allow the debtor time to file certificate: 1) is there a reasonable explanation for the failure to complete the course, 2) was the request to re-open made timely, 3) does fault lie with the debtor’s counsel, and 4) will the creditors be prejudiced.
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The best practice is to complete the second credit counseling course before the expected discharge date. But, if the second course is not completed timely, do not delay in filing the motion to reopen the case, it is at the court’s discretion if the case should be re-opened and if the debtor has provided adequate cause to reopen the case. Contact the attorneys at LifeBackLaw and see us at www.LifeBackLaw.com and let us help you get your life back.
