A recent study by the National Consumer Law Center concluded that the credit counseling and financial education courses required by the new bankruptcy laws (BACPA) have failed to provide significant benefits to individuals seeking bankruptcy protection.
New Burdens but Few Benefits: An Examination of the Bankruptcy Counseling and Education Requirements in Massachusetts, based its review on the implementation of the required courses in Massachusetts. The study cites several problems and proposes a number of recommendations to improve the process.
In my opinion, the required courses are largely ineffective do nothing more than impose an unnecessary expense and obstacle to individuals who need to file bankruptcy.
The pre-filing credit counseling course is designed to provide bankruptcy alternatives, but the individuals who are taking these courses often have explored all other avenues of debt relief and don’t have any realistic alternatives. They have to spend up to $50 for someone to tell them they should file bankruptcy, even if they already had consulted with a bankruptcy attorney and determined that was the best course of action. The requirements have inundated various credit counseling agencies, making it harder for them to provide counseling to individuals who actually good benefit from their services.
There is some value to the pre-discharge debtor education course, which educates individuals emerging from a bankruptcy about budgeting and financing with a focus on avoiding financial difficulties in the future. As the report details, the debtor education course has some problems, but I think it could be refined and made into a valuable education resource.
Isn’t one course enough? Why not eliminate the pre-filing requirement? The bankruptcy court could then focus its efforts on creating a meaningful, uniform, and widely accessible pre-discharge debtor education course.