In 2005, Congress enacted broad changes to the federal bankruptcy code. Among these changes was the new requirement that an individual debtor must complete a course in personal financial management before a bankruptcy discharge can be ordered in the case. The hope was that by mandating a little financial education, the individual would be able to make better financial choices and have a better chance at future economic success.
So does the personal financial management class help? That question was examined in a recent article posted on Creditslips.org, a bankruptcy blog written by attorneys, for attorneys. During a study conducted in 2007, debtors were asked "1) would what they learned in the financial education class have helped them avoid bankruptcy originally, and 2) would help them avoid financial trouble in the future." 33% responded that the course information could have helped them avoid filing, and 72% said the information would help them in the future.
The negatives of the personal financial management course are that it costs the debtor time and money (although the course only lasts an hour or two and typically costs around $50). Failure to complete the class can result in a denial of discharge (a very heavy penalty). The truth that bankruptcy practitioners know, and that the 2007 study data confirms, is that most people are forced to file bankruptcy through no fault of their own. There is no class that can teach you how to avoid a work layoff or large unexpected medical bill. No course that shows you how to pay your bills when you don’t have enough money
On the other hand, the personal financial management course teaches budgeting and money management. These skills can make it easier to make ends meet and help provide a more solid financial footing after bankruptcy.
If you need to file bankruptcy, your attorney can help guide you through the process and give you a fresh financial start. Building a better financial future requires the budgeting and money management skills you will learn during your personal financial management course. Your attorney will provide you with court approved providers for this course, and help get you enrolled.