Bankruptcy Scare
This strikes me as a classic case of consumer advocacy scare tactics:
A requirement of the new bankruptcy law that sends Americans into credit counseling before they can erase their debts is drawing criticism from consumer advocates, bankruptcy lawyers and financial educators, who are concerned that the creditors are subsidizing the counseling.
Debt Counseling and Management Information From the Federal Trade Commission Critics say that the new counseling requirement, part of the law that takes effect on Monday, increases the risk that people will be improperly steered away from the courts and into debt management plans, for which the counseling agency often receives part of any debts repaid.
At the bankruptcy seminars I've attended, the speakers were joking about how credit counseling agencies are springing up all over the place, many of them offering "While you wait" conferencing during the debtor's trip to the bankruptcy attorney. The debtor shows up to the bankruptcy attorney's office, meets with him for twenty minutes, then goes into another room with a paralegal and places a call to the agency. Ten minutes later, the certification of debt counseling will show up via e-mail or fax, and the attorney can proceed with the bankruptcy petition.
The credit counseling requirement is a joke, but it's not going to have a meaningful impace on the number of filings.
