Before a debtor can file bankruptcy they must complete a prebankruptcy credit counseling course. This course must have been completed within the 180-day period prior to the filing of the bankruptcy petition. Failure to comply with the credit counseling requirement can result in an order striking the petition, which results in no bankruptcy case being filed, or the court may even dismiss the bankruptcy case adversely affecting the debtor’s credit rating.
Sometimes a debtor is unable to complete credit counseling but is forced to file a bankruptcy petition to stop imminent collection activity. The Bankruptcy Code has set forth a rule allowing debtors with exigent circumstances to receive temporary waiver of the credit counseling requirement. Section 109(h)(3) of the Code states: “… (1) [counseling requirements] shall not apply with respect to a debtor who submits to the court a certification that – (i) describes exigent circumstances that merit a waiver of the requirements of paragraph (1); (ii) states that the debtor requested credit counseling services from an approved nonprofit budget and credit counseling agency, but was unable to obtain the services referred to in paragraph (1) during the 5-day period beginning on the date on which the debtor made the request; and (iii) is satisfactory to the court.”
What constitutes exigent circumstances that merit a waiver depends on where you have filed bankruptcy. Most courts have acknowledged that a pending foreclosure,wage garnishment, and repossession qualify as exigent circumstances that merit a waiver. However, some courts have taken into account how much notice of the collection activity the debtor had before filing bankruptcy, and punished procrastinators who had ample advance notice of a foreclosure, but waited until the 11th hour, by denying their request for waiver and dismissing the bankruptcy case.
In north Texas credit counseling agencies are available on the telephone and internet, and some agencies are available 24 hours a day. Because of the availability of credit counseling in this district it is very difficult to make a successful argument to a bankruptcy judge that a debtor made a good faith effort to obtain credit counseling prior to filing a petition but none was available. There is risk in involved in seeking temporary waiver of credit counseling. It is best to avoid having to file certification of exigent circumstances if at all possible by ensuring that the credit counseling requirement is satisfied prior to filing bankruptcy.
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