Q: How does the debtor education final rule differ from the debtor education provisions of the Interim Final Rule?
A: The final rule is significantly different from the Interim Final Rule. Below is a list of some of the major changes (all references are to the Code of Federal Regulations, title 28):
Adds a definition of “limited English proficiency” to mean the language proficiency of individuals who do not speak English as their primary language or have a limited ability to read, write, speak, or understand English (§ 58.25(b)(21)).
Requires providers to obtain advance consent from the USTP to engage an independent contractor to provide an instructional course (§ 58.31(a)(1)).
Prohibits providers from using direct mail or electronic mail solicitations to contact debtors, unless the solicitations include a prominent disclaimer stating “This is an advertisement for services,” and prohibits providers from using seals or logos that may be confused easily with those used by any federal government agency (§ 58.33(c)(4)).
Requires providers who offer instruction by telephone or Internet to meet specific identity verification requirements. Additionally specifies that providers shall not provide diminished instructional course services because any part of the course is delivered by telephone or Internet (§ 58.33(e)(1) & (2)).
Adds a new instructional topic entitled, “Coping with unexpected financial crisis,” which consists of the following: (i) identifying alternatives to additional borrowing in times of unanticipated events; and (ii) seeking advice from public and private service agencies for assistance (§ 58.33(f)(5)).
Requires providers who offer instruction by telephone or Internet to incorporate tests into the curriculum and ensure direct oral or in-person communication with debtor students who fail the test, or receive marks less than 70 percent. In the case of Internet instruction, the provider may ensure communication with debtor students who fail the test, or receive marks less than 70 percent, by e-mail, live chat, or telephone, as long as the provider responds to debtors’ questions and comments within one business day. (§ 58.33(g)(3) and (4)).
Requires providers to make additional mandatory disclosures concerning fees associated with generation of the instructional course certificate prior to rendering any instructional course services (§ 58.33(k)(1)).
Adds specific recordkeeping requirements (§ 58.33(m)).
Establishes a presumptively reasonable instruction fee of $50 per debtor (§ 58.34(a)).
Creates a rebuttable presumption that a debtor lacks the ability to pay the instructional course fee if the debtor’s current household income is less than 150 percent of the poverty guidelines for a household or family of the size involved in the fee determination (§ 58.34(b)(1)). The poverty guidelines are updated periodically in the Federal Register by the U.S. Department of Health and Human Services under the authority of 42 U.S.C. § 9902(2).
Requires the USTP to review the basis for the mandatory fee waiver policy one year after the effective date of the rule, and then periodically, but not less frequently than every four years (§ 58.34(b)(2)).
Specifies that chapter 13 trustees who are approved providers may provide an instructional course only to debtors in cases in which the trustee is appointed to serve and may not charge any fee to those debtors for the instructional course (§ 58.34(e)).
Requires providers who publish information concerning their fees on the Internet to include their policies enabling debtors to obtain an instructional course for free or at reduced rates based upon the debtor’s ability to pay (§ 58.33(k)(2)).
Permits debtors to verbally request providers to send their certificates to their attorneys (§ 58.35(a)).
Requires certificates to be issued within three business days after instruction is completed (§ 58.35(b)). The certificate shall bear the provider’s incorporated name and shall identify the judicial district the debtor requests, the delivery method, the course date, the instructor’s name, and the debtor’s full name (§ 58.35(k)-(m)).
Requires certificates to be issued only in the form approved by the USTP using the Certificate Generating System maintained by the USTP (§ 58.35(d)).
Eliminates the requirement that providers provide original signatures on certificates (§ 58.35(j)(2)).
Q: May an individual with a power of attorney for a debtor (such as an incarcerated debtor) complete a debtor education course on behalf of that debtor?
A: Yes, if the power of attorney is valid under state law and grants the representative the authority under state law to file a bankruptcy petition. The debtor education certificate must list both the name of the debtor and the name of the representative along with that representative’s legal capacity (e.g. John Doe, as Attorney-In-Fact for Jane Doe).
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