'Bankruptcy Law Is Criticized for Creditors' Role in Counseling'

article by ERIC DASH and JENNIFER BAYOT here.

 

A requirement of the new bankruptcy law that sends Americans into credit counseling before they can erase their debts is drawing criticism from consumer advocates, bankruptcy lawyers and financial educators, who are concerned that the creditors are subsidizing the counseling.

 

Critics say that the new counseling requirement, part of the law that takes effect on Monday, increases the risk that people will be improperly steered away from the courts and into debt management plans, for which the counseling agency often receives part of any debts repaid.