Bankruptcy Reform is One Year Old: Consumer Education Emerges as Key Issue

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One year after the Bankruptcy Abuse Prevention and Consumer Protection Act was passed, Springboard Nonprofit Consumer Credit Management finds that lack of money management skills is a contributing factor for those who file. Springboard offers both pre-filing counseling and personal financial management courses to debtors.

On October 17, 2005, the world of many nonprofit credit counseling agencies was turned upside down. When the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) went into effect on that date, agencies that had seen only a small percentage of consumers consider bankruptcy were suddenly flooded with those who thought it was their only option. One year later, Springboard Nonprofit Consumer Credit Management is counseling and educating consumers on their options regarding bankruptcy, and they believe the law provides a crucial opportunity for consumers to stop and consider before they move towards bankruptcy.

“We believe strongly that consumers need to make an informed decision about filing for bankruptcy,” said Dianne Wilkman, Springboard president. “Alternatives such as debt management plans and debt settlements may be options for some, while others may have overwhelming amounts of debt or a debt structure that does not allow for repayment. Bankruptcy is still very much available to consumers, and the fact that we have counseled thousands of potential filers shows that this option is still alive and well under the new law. The final decision about filing needs to come from the consumer, after considering all the options. We’re here to talk to them about what goes into making that decision.”

Springboard was one of the first nonprofit credit counseling agencies approved by the Executive Office of the United States Trustee (EOUST) to conduct pre-filing counseling on a nationwide scale. Springboard’s counselors have spoken with thousands of filers and potential filers about their financial situations and provided information on budgeting and spending guidelines, alternatives to bankruptcy and instruction on personal financial management.

In general, response from consumers to the required counseling has been positive. “Our counselors report that many consumers they speak with have never created a spending plan, and they appreciate someone taking the time to create one for their specific situation. Lack of money management skills is not the primary reason for every bankruptcy, but in many cases it is a contributing factor,” said Gary Augilar, manager of Springboard’s bankruptcy services. “The law has given us an extraordinary opportunity to educate consumers about credit and debt issues, and that’s at the very heart of what Springboard does.”

Statistics gathered by Springboard during the counseling process indicate that about a third of those counseled cited reduction of income as the reasons they are considering filing (consumers may choose more than one reason). Twenty-five percent indicated overspending/overextension of credit as a contributing factor. “While some circumstances are beyond a debtor's control, the current negative savings rate and overuse of credit in general contribute to putting some debtors ‘over the edge’ when disasters happen,” offered Wilkman.

Springboard also provides the required personal financial management course for those who have filed bankruptcy. Consumers can take the course via telephone and Internet, and again response has been positive. “I appreciate the fact that there is somewhere or someone that truthfully provides information and help in financial has made me physically ill, worrying and struggling, and I now feel more confident having attained very helpful knowledge and information regarding financial affairs. I will be using a cash only system from now on. I have been trained to see things from ‘what I need’ and not ‘what I want’ view point,” offered one consumer after completing the course.

Another graduate indicated, “This experience will be very helpful in my near future. As of today I will begin a budget for myself. This has helped me understand how important my credit, insurance, savings, banking, etc. [are]. My needs and wants are now very clear. Thank you for the credit counseling. I will surely recommend this site to friends and family that are dealing with credit problems or even recent graduates. I wish someone would have told me about this sooner.”

“The first year of sausage making under the new rules wasn’t always pretty, but the kinks are being worked out,” Wilkman concluded. “Consumers shouldn’t be afraid to explore all their options when considering bankruptcy.”

Springboard provides both bankruptcy counseling and education via telephone and Internet, and provides counseling and education to all consumers with financial questions. They can be reached at 888-4BK FILE (888-425-3453) or by email.

About Springboard Nonprofit Consumer Credit Management

Springboard, a nonprofit credit counseling and education organization founded in 1974, offers assistance with money management and budgeting through confidential counseling, debt management and education programs for financially troubled consumers. Springboard is accredited by the Council on Accreditation, signifying high standards for agency governance, fiscal integrity, counselor certification and service delivery policies that ensure low-cost confidential services performed in an ethical manner. Springboard is an approved provider of bankruptcy counseling and debtor education by the Executive Office of the US Trustees. Springboard has counseling locations throughout Southern California offering face-to-face, online and nationwide phone counseling services. For more information on Springboard visit or


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