The industry appreciates the commerce that the new debt relief legislation has sent their way, even if they are having trouble helping all of their new customers. Due to the influx of new business created by the bankruptcy law, many agencies have had to begin meeting with customers in groups and providing guidance over the Internet. Group counseling is far less personal and not nearly as thorough as it should be, but the Government-mandated fifty dollar maximum fee that counseling agencies may charge their customers has limited the opportunities of the agencies. Burdened with new customers due to the revision in law, agencies just can't provide enough help for the money paid them. Mandatory credit counseling has been good for the credit counseling industry, as they are now awash in customers.

Since the debt relief law was approved at the request of the credit card industry, the provision of the law mandating counseling was added in order to encourage more people to pay their way out of debt. There were a number of reasons for including financial assistance in the debt relief legislation, one of which was to provide people with some money handling education that they otherwise would never get. Few debtors ever have any kind of formal education when it comes to dealing with their money, so a bit of guidance could help them later. The primary reason for demanding guidance is that it was assumed that assistance might be able to steer a number of debtors towards a debt management plan rather than having them file for bankruptcy.
 

It is clear that mandatory guidance has not worked as planned. The thought that people file for debt relief in court because they simply don't feel like it is a myth. Many, if not most people file for bankruptcy because they have become victims of things they cannot control. A recent report shows that an astonishing ninety seven percent of all debtors who have undergone the credit counseling as required by the new law have ended up filing for bankruptcy. That most people with debt problems end up applying for debt relief shouldn't surprise anyone; most people who apply for bankruptcy do so as they simply cannot pay their debts. There isn't anybody that wants to file for bankruptcy; it destroys your FICO score and makes it quite hard to borrow money, find a place to live, or even find employment. For the most part, a consumer's debt burden is created by either an unexpected job loss or a medical crisis, such as an accident or illness.

Unless Congress determines that the bill is flawed, debtors will continue to see financial advisors, whether it aids them or not. Consumers have little option; we hope that they can derive some benefit from the required assistance.