CREDIT COUNSELING – THE USELESS REQUIREMENT
Congress decided in 2005 to revise the Bankruptcy Law and make credit counseling a requirement. Working in the legal field since 1987 (law clerk 87-89; attorney 89-present), we have never seen nor heard of a single case of any person who has ever saved their home because of a credit counselor. While untrained counselors who work off of scripts may offer some marginal benefit to a renter with credit card debt, the entire process of counseling is totally useless to the homeowner with mortgage arrears. Counselors simply cannot stop mortgage foreclosure and are powerless to modify loan terms. Yet, Congress imposed this requirement for bankruptcy. Many believe it was done to put “gatekeepers” in place to prevent abusive filings. But who are the gatekeepers? What qualifies them to do this and have they really helped anyone with a mortgage default? As non-attorneys, counselors are not legally permitted to give legal advice, yet the entire process is perilously close to just that. It is a dangerous practice and misleading to clients but it is somehow still the law. Failure to comply can have serious consequences. Courts are debating whether to strike a case or to dismiss it when the counseling certificate has not been filed. Dismissal is serious because the automatic stay protections are limited in repeat filings under the new laws. For now, since we are all stuck with this silly ritual, any clients who are considering bankruptcy or who may need to file a case quickly to stop a foreclosure sale should absolutely and immediately make arrangements for counseling either by phone or online. Contact our office for more information about this. We will recommend the counseling service that we prefer and can give you our firm code so that the counselor can email a certificate of completion directly to us. This certificate is required to be filed with the rest of the bankruptcy papers.