The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) provided new requirements for bankruptcy filers and gave the U.S. Trustee Program (USTP) new areas of responsibility. One of the new requirements is that any individual who files for bankruptcy must have received credit counseling during the 180 days prior to filing. When a consumer completes such prebankruptcy credit counseling, he or she receives a certificate that must be submitted at the time of bankruptcy filing.
USTP is now faced with having to decide whether to reapprove or remove agencies that are on the approved list of credit-counseling agencies. To do this, USTP must develop criteria for measuring the effectiveness of counseling-agency services that may be used to evaluate whether agencies qualify for approval or reapproval. Complicating the issue of effectiveness is the increased use of Internet-based credit counseling and whether the mode of delivery, particularly delivery through the Internet, affects the adequacy and effectiveness of the counseling provided.
The basic questions that the Executive Office for U.S. Trustees (EOUST), which manages USTP, is attempting to explore related to prebankruptcy credit counseling are as follows:
- What constitutes effective credit counseling in the prebankruptcy context?
- What are appropriate operational measures of effective prebankruptcy credit counseling?
- Does the mode of delivery of prebankruptcy credit counseling, particularly delivery through the Internet, influence the effectiveness of the counseling?
USTP asked RAND for assistance in examining the issue of what constitutes effective prebankruptcy credit counseling and how it could be measured. We reviewed the relevant literature that could inform the three questions and consulted with a bankruptcy study group of academic, government, and private sector experts formed as part of a joint National Institute of Justice–USTP (NIJ-USTP) project to study bankruptcy fraud, abuse, and error to get feedback on the literature-review results.
Contents
Preface
Summary
Acknowledgments
Abbreviations
Chapter One
- Introduction
Background
Objectives and Approach
Organization of This Report
Chapter Two
- Brief history of the Credit-Counseling Industry
Chapter three
- review of the research
Review of Credit-Counseling Literature
Review of Other, Related Literature
Literature on the Effectiveness of Online Instruction
Literature on the Effectiveness of Online Training Courses of Shorter Duration
Literature on Financial-Literacy Training
Literature on the Effectiveness of Prepurchase Homeownership Counseling
Chapter Four
- Conclusions and recommendations
Conclusions
Goals
Measures of Effectiveness
Metrics
Mode of Delivery
Recommendations
Use Upcoming Reviews and Reports to Inform the Process of Moving Forward
Consider Other Options to Move Forward While Awaiting Results of Upcoming Events
Study-Group Members
references
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Prebankruptcy Credit Counseling
