They cannot afford to be scammed, but Congress is requiring it.

[The Whiskey Priest]

Mary Deibel has written an excellent piece on a little known part of the new Bankruptcy Act. She reports on the FUBAR involving mandatory credit counseling.

If you declare bankruptcy, the Congress and the Prez says you must complete Credit counseling and financial education before you can apply. As Ms. Deibel asks, just who is going to provide that counseling?

Sam Gerdano, head of the nonpartisan American Bankruptcy Institute says “that it is an unfunded mandate on people who can least afford it.” The bankruptcy courts have six months to write the curriculum for these courses and to develop a list of approved counselors. The counseling is required to be face-to-face, via the telephone or over the internet.

The firms providing these services must be non-profit and can charge a reasonable fee. The only problem is that it would seem there is a large scale end-run occurring and many of firms will end up being connected to profit making organizations.

That is where the rub begins, last year, according the Federal Trade Commission, consumers were scammed of some $100 million, one firm, AmeriDebt, a nonprofit firm charged directing $170 million to related for-profit, high-fee firms. Remember this kind of money is going to be required of those already under extreme financial pressure.

It would seem that this is being seen as a major new entrepreneurial opportunity, some 600 applications for this sort of services has been received by the Internal Revenue Service.
The reason the IRS is receiving these applications is that firms providing this service will operate tax-free. IRS Commissioner Mark Everson says “that most of these firms will be operating for the benefit of the insiders and improperly with profit-making organizations.” Many of these firms will be operating without any state licensing oversight. Only a few states require license for this sort of service.

Congress and the President are operating under the assumption that a large percentage of personal bankruptcy occurs due to bad financial management. When in fact the lion’s share of personal bankruptcy occurs due to large health expense, divorce or losing a job, people experiencing that sort of event will not benefit from taking a course on financial planning from what may well be a con-man.
All that is going to transpire is those in financial straits are going to be injured further by the expense of this requirement, with no benefit in sight. Of course those in the business of providing this sort of service is going to make out like a bandit…..bandit, wonder if the act requires them to wear a mask?

http://www.capitolhillblue.com/artman/publish/article_6558.shtml

[Deja Q]

1. Complete the counseling? Doesn't that mean that we simply

can't get bankruptcies?

I'm in counseling and have a while to go, you see. I've learned from my mistakes. Hopefully not too late.

Wish neocons would do the same.

[beyurslf]

2. Why would we require someone who is bankrupt to pay a credit counselor

If we really believe this is the problem weshould provide them at no charge.

[peacetalksforall]

3. So a person who has had a business or a life-long career, plus an

education, a family, paid mortages and bills and who ends up in bankruptcy.....has to go to school - adding to their pain and empty pockets.

The absurdity of our legislators is sky-rocketing.

This is an atrocity.

Dems who voted for this in the Senate are traitors to humans.

Down with Biden, Byrd, and all the others who voted yes.

Despicable.

We are in a democracy or are we in the worst country on the earth?

Profiteering on the desparate.

They are all out of their minds.

The Senate and Congress own us along with the cabal and corporations.