CREDIT COUNSELING AGENCIES GOING BROKE?

June 5, 2006

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Study: A funding gap in bankruptcy counseling
By Brigitte Yuille • Bankrate.com

Credit counseling agencies say they’re losing millions of dollars and may have to offer less personalized service, thanks to the new federal bankruptcy law.

The National Foundation for Credit Counseling, or NFCC, agencies that are approved to participate in the bankruptcy counseling fear that even though bankruptcy filings are currently at a 20-year low, increasing interest rates, regulatory changes on minimum payments and the high percentage of adjustable-rate mortgages will increase bankruptcy filings to previously high levels.

“We have seen an uptick in the number of consumers needing the counseling, which is corresponding with the gradual increase in filings,” says NFCC President and CEO Susan Keating. “Overall, we would expect a normalizing of the filing load to occur at some point later this year, which equates to sizeable counseling increases.”

That’s bad news for the 106 NFCC member agencies administering the bankruptcy counseling, because they could lose as much as $12 million this year if the number of 2006 bankruptcy filings hit the number currently projected by industry experts.

For full story - http://www.bankrate.com/brm/news/bankruptcy/20060523a1.asp