The bankruptcy law that Washington passed in 2005 was intended to completely reform debt law as we know it. There were a few reasons for reforming debt relief law, but the primary one was that the charge card companies and Legislators believe that many, if not most people who file for bankruptcy through the courts are fully capable of paying back their financial obligations and are filing just because they want to avoid repayment. The new law clamps down on debtors in some rather serious ways, including a provision that debtors must undergo credit counseling prior to a bankruptcy filing.

The new law mandates that the costs billed to debtors be "reasonable." The law did not specify a fee structure for counseling companies, but a fee of $50 was recommended. Prior to passage of the law, few debtors enrolled in counseling sessions, believing that their financial obligations were too great for them to be helped by credit counseling. The counseling requirement has had the effect of harming the credit assistance industry and failing to help debtors. The counseling industry simply was not as big as it needed to be to handle the large influx of new clients that are now being railroaded through the system. The suggested fee guideline has created problems for the industry, as that proposed fee doesn't compensate for the cost of offering the service, nor does it provide sufficient additional funding to hire extra counselors.

The filers aren't enjoying any benefits from the mandatory credit counseling clause. Instead of a series of thorough meetings that would permit a credit counselor to take a serious look at an individual's financial matters, the "counseling" mostly consists of either a group meeting and some cursory "do not spend more than you have" suggestions. Occasionally, the customer just receives "counseling" via the Internet through some kind of automated program.

The counseling industry, which formerly at least pretended to help debtors with their problems, is currently just a turnstile for people with $50 bills. If the purpose of passing the bankruptcy law was simply to make it so difficult and time consuming to file that consumers might be discouraged from doing so, the law may have accomplished its goal. Is no-help credit counseling really what Legislators intended? If, as Washington suggests, the purpose of the counseling provision was to get people back on their own two feet so that they could repay their debts instead of having the courts wipe them out, the debt relief law has almost certainly been a waste of time.

It is looking more and more as though this debt relief legislation, like many that come from Congress, is just a nuisance that is wasting the time of all participating and helping no one. Statistics establish that almost 97% of the people who have enrolled in credit guidance meetings have still qualified to file for debt relief.