There are a number of steps for individuals to undertake when filing for bankruptcy protection in Hawaii, not the least of these being credit counseling and debtor education. Below we will cover, in summary, the key differences between these two important requirements and what is expected of an individual who is filing for bankruptcy protection as it applies to credit counseling and debtor education.

The Difference between Credit Counseling and Debtor Education

Credit counseling is counseling you must obtain before you file your bankruptcy petition (pre-petition), whereas debtor education is the education undertaken after your petition has been filed (post-petition), and it is a requirement of your discharge being issued. The focus of credit counseling is on your current debt and potential ways to avoid bankruptcy. Debtor Education’s focus is on how to avoid getting into debt again.

Who Needs to Obtain Credit Counseling?

Credit counseling is a requirement for all individual debtors filing under chapters 7, 11, 12 and 13 of the Bankruptcy Code, and this is true whether or not your debts are consumer or business in nature. The only exceptions are those who are in active military duty in a combat zone, physically incapable of obtaining credit counseling such as through disability or mentally incapable. In these cases, credit counseling is not a requirement.

When Must Credit Counseling be Obtained?

Credit counseling must be obtained within the 180 days before filing for bankruptcy. Should there be extenuating circumstances where the petitioner is unable to get credit counseling before filing for bankruptcy they should be able to get it within the 7 days after filing, otherwise they will need to petition the court to ask for the credit counseling to be completed during the 30 days after they petition for bankruptcy.

Must Credit Counseling be Completed in Person?

Petitioners can attend credit counseling in person, or it can be done over the phone, or even over the internet. Different languages are available (see the link below for more details.)

How is Fulfilling the Credit Counseling Requirement Proven?

The credit counseling agency gives bankruptcy petitioners a Certificate of Credit Counseling upon completion of credit counseling. This certificate needs to be included when submitting an application for bankruptcy protection or the case will most likely be dismissed. Faxing or emailing the certificate is not accepted; it must be sent by mail or filed in person to the court. Only an attorney working on your behalf can file the certificate over the internet.

Please note that the certificate number alone is not enough; a copy of the original Certificate of Credit Counseling is required. If the certificate has not yet arrived from the agency at the time of filing then the petition can be accepted, as long as the Certificate of Credit Counseling is sent to the court within 14 days.

Who Offers Credit Counseling?

The Bankruptcy Clerk’s Office maintains a list of approved non-profit credit counseling agencies accredited to offer credit counseling. This list is maintained by the U.S. Bankruptcy Court of Hawaii and can be found here. These agencies have been approved by the United States Trustee Program.

Who Needs to take a Debtor Education Course (Post-Petition)?

credit counselingAnyone filing under chapter 7 or 13 of the Bankruptcy Code must take instruction from a debtor education course. The same exemptions to taking a Credit Counseling course listed above also apply to Debtor Education Courses.

When Must Debtor Education Be Completed?

Although many agencies provide both credit counseling and debtor education courses, these must be taken at separate times. Debtor education can’t be started before the bankruptcy period is active.

Furthermore, if the bankruptcy is filed under chapter 7 of the Bankruptcy Code the debtor education course must be completed within 60 days after your first creditor meeting. For chapter 13 petitions it must be completed before the final plan payment or before a motion requesting discharge due to hardship is filed.

If these deadlines are not met the court will send notification – without completing this requirement the debtor technically remains liable to repay all previous debts and the court may choose to close the case without discharge.

How is Fulfilling the Debtor Education Requirement Proven?

The agency will supply a Certificate of Debtor Education upon successfully completing the course. This is a requirement for discharge from bankruptcy. This should be filed with the court along with Official Form 23, but unlike the Certificate of Credit Counseling the certificate number will suffice as proof of completing Debtor Education. The form must be taken to the course in person or mailed – email or faxes are not acceptable.

Who Offers Debtor Education Programs?

There is a separate list of agencies that offer debtor education programs to those who offer credit counseling; this can be found online here.