Mark Winston Griffith

Council takes on Counseling Hustle

One of the most dubious distinctions in the areas of consumer financial literacy is that of the "credit counselor". There is no shortage of people who have gotten in over their heads with debt, many of whom are considering bankruptcy. As a result, there are countless individuals and companies who are swimming around, some sharks, others a milder form of predator, trying to get you to pay handsomely for their often times not-so-good advice. Every year people report going to credit counselors and leaving the experience poorer and in even a worse position with their creditors.

A new law unanimously passed by the City Council is designed to help you avoid these beasts when you are applying for bankruptcy. Under the current bankruptcy law bankruptcy filers must get budget and credit counseling, within 180 days of their filing, from an agency that has been approved by the federal government. As you can imagine, this has encouraged all sorts of agencies to put out their shingle for this service, even those that have not received federal approval. In particular, only non-profit organizations can be accredited.

Unfortunately, many people, anxious to comply with the bankruptcy requirements, don't realize they are using sham counselors. The City council measure would mandate that counselors sitting down with bankruptcy clients have to disclose if they have received this federal good counseling stamp of approval.

Kudos to the City Council. This is one of the few pieces of good news since the nasty, so-called Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 went into effect last year.

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Posted at 11:58 AM, Aug 18, 2006 in
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