| 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.
"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.
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