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Credit counseling is no good if you don't know what you're getting
The recently passed bankruptcy law known as the.Bankruptcy
Abuse and Consumer Protection Act was intended to make it harder
for consumers with debt problems to file for bankruptcy
protection. It was also intended to keep the credit card
companies profits as high as possible, as that industry suffers
the most from bankruptcy filings. An additional "benefit" to
this legislation is to provide financial counseling to those who
need it.
"Those who need it" is defined in the new law as everyone.
Counseling will now be a mandatory prerequisite for anyone
considering a bankruptcy filing. The theory is that by offering
financial advice to those who have problem debt, repeat filings
can be avoided. That's helpful, as many Americans don't get
sufficient financial education in our schools. There is just one
problem with this requirement - it's largely undefined.
The credit counseling industry has been suffering some recent
hardships as the Internal Revenue Service and the Federal Trade
Commission investigate fraud that seems to run throughout the
industry. The most frequent complaint is that many agencies
which claim to be nonprofit are actually subsidiaries of
for-profit companies. Some of these "nonprofit" groups have been
encouraging their clients to consolidate their debts using
repayment plans that involved the for-profit companies, which
leave the motives of the nonprofit agencies in question. As
these matters are being investigated, this new legislation
requires consumers to seek help with their debt problems, adding
to the general unease associated with seeking help.
Unfortunately,
Congress left this portion of the legislation rather vague. Yes,
counseling is required, but
with whom? Can anyone who calls
themselves a counselor qualify? The bill doesn't say, although
the US Trustees office is accepting applications from companies
that wish to be approved. May fees be charged? Yes, the bill
says that such fees may be "reasonable" but doesn't say what
that means and adds that counseling must be provided even if the
debtor cannot pay.
Who must pay for the counseling? Will the debtors pay
themselves, or will taxpayers foot the bill? Or the creditors?
While it is generally assumed that these matters will be worked
out by October 2005, when the law takes effect, some in the
industry are concerned that some debtors simply won't bother.
Instead of seeking counseling, they may just let their creditors
chase them in hopes of collecting payment.
That's the last thing anyone wants, so it would be in the best
interests of all Americans for the Government to define as many
aspects of this legislation as possible before the deadline. It
would also help if these issues, once resolved, were advertised
sufficiently that anyone who was considering a bankruptcy filing
would know what to do. Given the way Congress works these days,
that may be asking a lot.
Talbert Williams offers debt consolidation referrals and
advice. For more information, articles, news, tools and valuable
resources on debt solutions, visit this site:
http://www.1debtfreedom.com
About the author:
Talbert Williams offers debt consolidation referrals and
advice. For more information, articles, news, tools and valuable
resources on debt solutions, visit this site:
http://www.1debtfreedom.com
Written By: Talbert Williams