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Value of Credit Counseling Requirement Is Not Clear: That’s the title of a 54 page report issued this month by the United States Government Accountability Office. The GAO was asked to examine the process of approving credit counseling providers, the content and results of the sessions, the fees, and the availability and accessibility of the required credit counseling briefings.

To no one’s surprise (or at least, no one who is involved in the consumer bankruptcy process), the GAO found that the benefits of the credit counseling requirement were not clear. Although the requirement is intended to make sure that consumers have adequate information to make informed decisions about bankruptcy and are aware of their other options, the evidence suggests–as consumer bankruptcy attorneys and credit counseling agencies have been pointing out almost since the moment BAPCPA took effect–that most consumers have reached the crisis point by the time they seek pre-filing credit counseling, and are unlikely to have other viable options available at that stage.

The credit counseling requirement is still in effect, and filing for bankruptcy without having completed the required credit counseling briefing and filed a certificate can mean dismissal–which can have catastrophic results when the automatic stay is lifted and actions like foreclosure and repossession can move forward. However, the GAO is suggesting that the U.S. Trustee Program begin tracking and analyzing outcomes of the pre-filing credit counseling requirement.

The GAO also suggested that the U.S. Trustees create clearer guidelines for determining when fee waivers based on inability to pay should be required.

This entry was posted on Saturday, April 28th, 2007 at 3:47 pm and is filed under Bankruptcy Law and Bankruptcy Lawyers. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.