After filing a bankruptcy case, the law requires the debtors to take a financial management course, which is done either online, by telephone or in a classroom. If a debtor does not take this course, the bankruptcy court will close the case without a discharge. Since the discharge is the motivation for filing a bankruptcy case, it is essential that this course be taken.
In order to better explain to my clients what to expect, I took this course from a provider called StandSure. They charged $15.00 for the course, which seems about average for other course providers in this area. I found the course to be informative.
The course begins by asking questions about what people already know about finances, such as what a budget is, or about money management. After that, the course explains that the financial management course requirement and the budget management, the importance of setting goals, how to set goals, the difference between short term, medium term and long-term goals. The course explains the percentage of an individual’s income that should be devoted to each item in their budget. For example, mortgage or rent should be no more than thirty percent of the household income. Then the course provider discusses money management (thinking about what you want as opposed to what you need; the importance of comparison shopping; budgeting your money by tracking your spending, then reviewing your spending, and then creating a budget by taking into account your income; fixed and varied expenses, and learning to balance your checkbook; the importance of avoiding payday loans and title loans; information about insurance and the importance of saving money. The course provider then goes on to explain all about credit listing the different types of credit; secured and unsecured credit. The course provider discusses the importance of comparing credit offers and then explains the concept of predatory lending. Credit discussions then explains FICO and credit scores, as well as the impact of bankruptcy on an individual’s credit report.
The course provider listed several websites that provided free financial information to consumers and then provides a nice summary of consumer protection laws. Finally, the course gives a thorough summary of the changes of the bankruptcy law since the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. At the end of course, you receive a Certification of Completion. I found the course to be very informative and I thought it was a lot more interesting and a lot more useful than the prebankruptcy credit counseling course.
I recently read Dave Ramsey’s book regarding financial management after bankruptcy. I and several lawyers in the West Tennessee area agree that it was rather condescending. This makes me reluctant to recommend that particular course.