Situation
New bankruptcy law requires credit counseling to determine repayment ability
In 1st 3 months of new law, most applicants can't qualify for debt management
Overwhelming majority filing for bankruptcy instead of using repayment plans
Credit counselors say they are seeing people "with true hardships"
Many debtors in such financial distress say they can't afford counseling fee
Financial industry says not ready to give up on steering consumers into repayment plans
Significant Points
Banks, credit card issuers hoped counseling provision would keep consumers out of bankruptcy court
Say too early to tell how well new requirement working because so many consumers filed under old, less-restrictive law
Critics of old law suggested bankruptcy protection used by spendthrifts who might be able to repay debts
But counselors say not seeing that type of debtor
American Bankers Association's Philip Corwin says consumers filing now not representative sample
Credit counselors expect bankruptcy filings to rise in next few months Read QuotesClick Here for Full Digest and Source Article:
http://www.automotivedigest.com/view_art.asp?articlesID=18099
Sourced From: Washington Post, January 17, 2006
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