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Mandatory Credit Counselling for Those Considering Bankruptcy by
Charles Essmeier
Most Americans are aware of the sweeping changes in U.S. bankruptcy
law that were made by Congress recently. These changes, strongly
supported by the credit card industry, were designed to make it more
difficult for Americans to file for bankruptcy under Chapter 7 of the
Federal bankruptcy code. Chapter 7 allows consumers to essentially have
all of their debts wiped away by the court. While many people will still
be able to file under Chapter 7, many more will have to file under
Chapter 13, which requires the establishment of a repayment plan. A less
publicized provision of the bankruptcy bill is the one that requires
debtors who are considering filing for bankruptcy to first undergo
credit counselling. What does this mean for consumers?
Actually, the details are not yet known. The law, which takes effect on
October 17, 2005, does require that debtors considering bankruptcy
receive credit counselling at least six months before filing for
bankruptcy. The law also requires that they receive additional
counselling before the case is finalized and that any agency providing
counselling services must charge an undefined “reasonable fee.” Other
than that, there are no details yet. The portion of the law that deals
specifically with credit counselling hasn’t yet been written, and the
full details are not expected to be released until mid-summer. Even
those who work in the credit counselling industry do not know what will
be expected of them once the law takes effect.
For consumers with problem debt, this confusion is only making a bad
situation worse. In the Fall, more steps will be required of those
filing for bankruptcy, but no one knows what those steps are, what they
will cost, or how involved they will be. Anyone who has a current
financial situation that they feel may lead to bankruptcy would be well
advised to consider filing now. Bankruptcy should be considered a last
resort for those with problem debt, as a bankruptcy filing will stay on
a credit report for at least ten years. If bankruptcy appears
inevitable, however, filing now will probably be easier, cheaper, and
faster than filing after the new law takes effect in October.
About the Author
©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of
Retro Marketing, a firm devoted to informational Websites, including
End-Your-Debt.com, a Website devoted to debt consolidation
information and StructuredSettlementHelp.com, a site devoted to
information on structured settlements.
