Mandatory Credit Counseling is Pointless

The bankruptcy law that effect on October 17, 2005 requires credit counseling for everyone who files for bankruptcy. But,

[A] study, which surveyed six major credit counseling firms dealing with 61,335 bankruptcy filers since Oct. 17, showed that only 3.3% of people in the study were eligible for a debt management plan and could avoid filing bankruptcy.

About 79% of the filers in the study:

were seeking bankruptcy due to circumstances beyond their control, defined as emergency medical expenses, loss of employment, higher minimum payments on credit cards, change in marital status or other unexpected events.

Rather than requiring credit counseling for everyone, the law should require, after filing, but prior to discharge, credit counseling for people whose need to file bankruptcy arose from poor budgeting and personal financial management, with debtors allowed to offer alternative approved reasons (such as emergency health expenses, casualty or theft losses, loss of employment, change in marital status, liability for an accident, professional liability, or lack of business success), if they qualify and wish to skip credit counseling.

Hat Tip to Daily Kos diarist MonteLukast.