Bankruptcy Counseling en Español?

17 Nov Bankruptcy Counseling en Español?

Consumer bankruptcy counseling is an unnecessary step added to the already long list of the debtor’s duties in the bankruptcy process. It wastes the debtor’s time and money as well as unnecessarily complicating the process of obtaining relief. Federal bankruptcy law requires debtors to complete a course and obtain a credit counseling certificate within six months before filing. The certification requirement, codified in 11 USC §109(h), was added by Congress in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Some, but not all credit counseling services provide counseling in Spanish. This is another hurdle for a debtor to cross that often costs $20 to as much as $50 in addition to other bankruptcy expenses.

While all providers of credit counseling services must be not for profit entities, some are more nonprofit than others. A leader in the “Credit Counseling” field is an offspring of a longstanding institution in the California bay area, the Tides Center. Their website, charges far less than most services but has been only offered in English until recently. With the debut of their new Spanish language website Spanish speaking debtors can receive Consejería de Crédito (credit counseling) in their native language. For other Spanish language bankruptcy information the Middle District of Florida bankruptcy court website provides a great deal of information including video in Spanish.

Ever since Congress began requiring individual debtors to undergo pre-bankruptcy counseling there have been questions about the true need for this exercise. In theory, it was intended to foster reflection in the debtor who may only need some help with their budget and could avoid bankruptcy with the proper instruction. Most bankruptcy lawyers, including this author, believe it was intended to foil attempts by some debtors to file.

After years of experience with the counseling requirement, I have not once had a client come to me for help and change their mind about filing a bankruptcy after reviewing finances with a credit counseling agency. It just does not happen. From my perspective, as a bankruptcy lawyer,it is a waste of money and has resulted in the growth of an entire industry created to prey on the financially downtrodden. The credit counselingserviceprovides no help to the debtor other than assisting them to comply with federal law.

The people who run these bankruptcy counseling agencies are nice to me and my clients and hand out fun promotional gifts at trade shows. They are not responsible for creating the requirement. But, many of them have become entrenched in the business and rely on it for their economic livelihood. It is in their financial interest to continue the requirement; even though most of them admit it is of no benefit to the debtors.

Image Credit to Microsoft Clipart

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I was admitted to practice in 1978. I am certified as a Consumer Bankruptcy Specialist by the American Board of Certification. I regularly speak on tax and bankruptcy issues at state, regional and national conferences. Years of experience in practice before the Internal Revenue Service and Oregon Department of Revenue have given me the background to resolve a large variety of consumer tax issues.
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