A bankruptcy credit counseling session
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"One of our services is to provide interpreters for those who are unable to speak English," says Richard Schram, quality assurance manager at the Central Florida office. "The lady in charge of bankruptcy counseling speaks French."

As Schram walks the hallways of the Central Florida agency to an empty office, he passes a couple of trophy cases filled with credit cards sliced in half. The credit cards have been turned in by clients who have enrolled in the agency's debt-management program.

"Often it's a moment of truth," Schram says. "The counselor passes the scissors across the desk to the client to make that all-important first step. Sometimes it can be scary for the client, too."

He points out that 68 percent of the agency's bankruptcy clients are counseled over the phone, while 32 percent are seen face to face.

"We have Internet, but it's more of an interactive Internet." He says a client can apply for Internet counseling, but a counselor will most likely contact the client by phone.

Between the last week of October and the end of January, the agency has had 440 bankruptcy clients both face to face and by telephone. But as of January, only one bankruptcy client was eligible for the debt-management program and able to partake in the "moment-of-truth."

"One of the things that creditors are looking for in the debt-management plan is consistency in clients being able to make their payments," says Schram. "If clients are unable to make their debt-management payments on time, they're not a good candidate."

A recent study by the National Association of Consumer Bankruptcy Attorneys found 96.7 percent of respondents couldn't repay any debts, with only 3.3 percent able to pay off what they owe in debt-management plans.

The attorneys' February report, entitled "Bankruptcy Reform's Impact: Where Are All The Deadbeats?" analyzed more than 61,000 consumers seen by six large and small federally approved credit counseling firms. The study also discovered 79 percent of those seeking bankruptcy counseling are suffering from debt "caused by circumstances beyond their control" such as a job loss and medical expenses. The report concluded that the bankruptcy law imposes new costs, excessive paperwork and time burdens.

The bankruptcy counseling has had a slow start, but Schram believes the flow is starting to pick up.

"By the end of March, I believe we will see more filings. We've been through the Christmas season and when credit card statements come in, reality strikes and there are a lot of people that will seek relief through bankruptcy courts."

Some attorneys say they are spotting hints of an upturn.

"We're certainly getting a lot more phone calls requesting bankruptcy consultations since most of the major credit card companies recently changed the formula they use to compute their minimum monthly payments," says Sullivan.