Your bankruptcy case has been closed without a discharge. How did this happen? What do you do now? In their infinite wisdom and as a gift to the credit card lobby Congress created a requirement that you complete a financial management course before you can get a discharge in bankruptcy. This applies in both chapter 7 and in chapter 13 cases. The class completion certificate must be filed with the court no later than 60 days following your meeting of creditors. If you completed the course and you did not file the certificate, too bad for you.
The penalty for not filing Form 23 advising the court that you completed the financial management course is to enter on the docket an entry stating: case closed without discharge. If you do nothing you have gone through all the effort for nothing. The automatic stay is canceled, and there is no discharge injunction protecting you and your possessions from your creditors. The collection calls will all begin again.
You can correct this mistake. All is not lost. You need to take these steps without delay:
- Complete the financial management class.
- Prepare Form 23 and file it with the court.
- Prepare a motion to reopen your bankruptcy case.
- Here’s the kicker: file your motion to reopen the case. The filing fee for this little error is $260.00.
- Schedule a hearing date on the motion. Serve the motion and notice of hearing. You will need to attend the hearing.
Form 23 is part of the bankruptcy petition package in your bankruptcy software. Although it is not required, I attach the certificate of debtor education when I file the form. The motion is very simple. Just ask the court to reopen the case and state the reason that the certificate of debtor education was not filed within the required time frame.
There is really very little to the hearing. If the motion is properly written, served and noticed then you just have to stand before the court and it will be granted. If you don’t state sufficient cause in your motion you might have to be prepared to provide the judge an explanation. Once the motion is granted by the judge you will have to submit an order for the judge to sign granting reopening of the case. Very little time and effort is expended for the $260 filing fee. If you figure out what the $260 pays for let me know with a comment.
As a matter of practice, if the error in not filing the certificate of debtor education is on the part of the attorney, then the he should fall on his sword and pay the filing fee and assume the fees for the motion and the hearing. If the mistake was on your part, be prepared to pay the filing fee, fees to the attorney for drafting and filing the motion to reopen the case, and for his time to attend the hearing. This whole problem is so easy to avoid. Don’t wait until the last minute to complete the financial management course. You can do it anytime after the case is filed. All you need is a case number. After you complete it call your lawyer. It isn’t enough for him to have the certificate. Insist on confirmation that form 23 has been filed with the court. That way you avoid the dreaded notice that you had your bankruptcy case closed without discharge.