Credit Counseling Strictly Enforced

I read an interesting post on the Bankruptcy Litigation Blog concerning bankruptcy court enforcement of creditor education requirements. Link: Bankruptcy Litigation Blog. Debtors who have filed under the new bankruptcy law on the brink of foreclosure or eviction have been refused bankruptcy relief because they failed to strictly comply with requirements for pre-bankruptcy debtor education.

The following is the conclusion of the post:

"The Bankruptcy Courts in both cases adopted the "plain meaning rule" of statutory interpretation and rejected each of the respective debtor's certifications for failing to strictly comply with all the requirements of Bankruptcy Code section 109(h). This section requires, at a minimum that the debtor make a request for credit counseling services during the five-day period preceding the filing, and then certify its inability to obtain those services. Because in each case, the debtor failed to comply with the strict requirements of Section 109(h), the Courts dismissed the petitions, notwithstanding the clear exigencies facing the debtors."

The lesson is that debtors must plan ahead. If bankruptcy looks like a possible solution to a legal problem it makes sense to take the credit counseling course in case a last minute filing becomes necessary.

posted by Jonathan Alper, asset protection and bankruptcy attorney, Orlando Florida