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Avoid Cases From Being Closed Without A Discharge

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Avoid Cases From Being Closed Without A Discharge

I am sure we have all had it happen. A client’s case gets dismissed without a discharge for failure to take the predischarge financial management course. Inevitably, the client will be upset claiming that you never told them to take the class. In order to avoid this problem you should take four opportunities to advise your client of the requirement: (1) at the initial consultation as part of your retaining process and package, (2) at the time the client comes in to sign the petition and (3) as part of the petition package mailed to client after filing and (4) at the 341(a) Meeting of Creditors.

Typically the credit counseling provider will send you flyers. Always include these as part of your retaining package. While you are explaining the process to the client, highlight the two classes with a red sharpie so the client can physically see you do it, pointing out there will be a second class after the filing. (Most of the flyers come on that shinny paper so I found it easier to copy the flyer onto white copy paper to use the red sharpie).

The second opportunity is when the client comes in to sign their petition. Below you can download a memo that I call the BK Memo. I recommend you use it at every petition signing appointment. Review it with the client, have them sign it and give them a copy. The BK Memo not only confirms that the client has reviewed the petition and agrees that all assets and liabilities are listed (a topic for another article) but reinforces the requirement to take the second class. You will notice that the BK Memo states there is a $1,500.00 fee to reopen the case to file the predischarge financial management certificate. While you may not want to charge your client $1,500.00 to reopen the case, this figure tends to get their attention and be a good reminder to take the class. In addition, you are protecting yourself from blame, and covering yours costs if the client does fail to take the class. Whatever you ultimately decide to charge, don’t forget there is a $260.00 filing fee to reopen a case. Another good practice tip is to tell your client to take the class BEFORE the 341(a) Meeting. Getting it out of the way before the 341(a) Meeting eliminates you having another task to follow up on after the hearing. The good news is that if your client does fail to take the class, the form motion itself is fairly simple and doesn't require notice on the creditors.

The third opportunity is to include the signed BK Memo in the petition package you send to your client with a copy of the filed petition and 341(a) Meeting instructions.

Finally, prior to going to the 341(a) Meeting, check to see if your client has taken the class. If not, remind them at the Meeting to take the second class (or let your appearance attorney know to remind them). If the client has taken the class, you can give your client the good news that everything looks good and there is nothing left to do but wait for the discharge.