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Prebankruptcy Credit Counseling

NCJ Number
Date Published
36 pages
This report presents findings from an examination of what constitutes effective prebankruptcy credit counseling and how it can be measured, so as to assist the U.S. Trustee Program (USTP) in its initial approval and periodic reapproval of credit counseling agencies under the Federal Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA).

The report concludes that USTP's first step should be to identify the goals of prebankruptcy credit counseling. Other suggestions depend on these goals being defined. Even if these goals are defined, however, the report concludes that there are no common standards or accepted measures that can be adopted by USTP as a whole in assessing prebankruptcy credit counseling agencies; however, a few criteria may be adopted from some of the research studies reviewed. Although many of the approaches had similarities, each field approached the assessment of credit counseling effectiveness differently based on its specific goals. The report also concludes that there are no accepted views on the various models for delivering credit counseling. The effectiveness of the modes apparently varies according to the type of counseling being delivered and its purpose. Based on the aforementioned conclusions, the report recommends that USTP use a series of upcoming reviews and reports to help it inform the processes of developing operational measures of credit-counseling effectiveness to be used in approving or reapproving credit-counseling agencies. The report suggests that in evaluating agencies for reapproval, USTP should consider whether the agency is providing the services stated in its application, along with the methods used by the agency in measuring its own effectiveness. 29 references

Date Published: January 1, 2007