Bankruptcy credit counseling gets mixed reviews
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Sonya Bryant, certified credit counselor for Consumer Credit Counseling Service in Boca Raton, Fla., describes her bankruptcy clients as hesitant.

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"A lot of times you have to draw information out of them," she says.

Distant counselors
Critics say effective counseling requires far more time and communication than a telephone or computer session can give. Feinstein notes that as of mid-December, approved credit counseling agencies were not available in Seattle. Therefore debtors had to either contact 800 numbers or go online, which he says a majority of his clients have done.

"I've had people in my office go into my secretary's cubby and go online there and go through the session. I've watched in the background. Consumers go through a questionnaire online, and there's no one-on-one feedback."

Agencies approved to give counseling in his area are in Texas, California, Georgia and Virginia.

"The counselors know nothing about Seattle," he says. "They don't know the housing costs because they are 3,000 miles away."

He says real counseling involves bringing in bills, important documents, pay stubs and tax returns, and sitting down with a counselor to thoroughly manage affairs.

Congress created the new law to convince consumers that "it's just not worth going through the hassle of filing for bankruptcy," says Feinstein.

He concedes he has yet to see how the post-filing credit counseling also required by the new law will work. He said he hopes that the government will do a study within the next couple of years to determine if it should expand the requirements needed to get the certificate.

"We are too new in the system to see clients go through the personal financial education course," Feinstein says. "Maybe that one's better. Maybe it's more substantive. The first one to me is a joke."

Consumer bankruptcy attorney and Bankrate columnist Justin Harelik agrees that bankruptcy counseling needs to be more hands-on.

"It needs to address the psychological and emotional issues on how the debt was incurred and how people spend money," says Harelik.

Some attorneys say they are pleased with the services they've used.

"Many of my clients are not computer-literate, and are therefore uncomfortable completing the classes online," says bankruptcy attorney Deirdre Sullivan of Kagen, MacDonald & France P.C. in York, Pa. "The Institute for Financial Literacy was willing to conduct their counseling via telephone instead. The clients who are computer-literate found the classes easy to complete.

"I like that their Web site allows me to enter the client's basic information and then their site generates an e-mail to my client, which includes a link to the Institute's Web site, which takes the client right where they need to go."

Additional requirements
The pre-filing session has been described as the ticket into bankruptcy, while the post-filing credit counseling is the ticket out. But in either case, the bankruptcy courts must have proof. Consumers will have to present a certificate from the credit counseling agency when they submit their bankruptcy paperwork to be filed and from the personal financial management course provider before their debts are discharged.