Daniel Akaka: “I rise to introduce the Bankruptcy Prevention Credit Counseling Act. The new bankruptcy reform law does not allow…”

“I rise to introduce the Bankruptcy Prevention Credit Counseling Act. The new bankruptcy reform law does not allow consumers to declare personal bankruptcy in either Chapter 7 or Chapter 13, unless they receive a briefing from an approved nonprofit credit counseling agency within 6 months of filing. The credit counseling instructional course requirement is intended to provide financial education to consumers who declare bankruptcy so they can attempt to avoid future financial problems. About one in three consumers in credit counseling enter a debt management plan. In exchange, creditors may agree to concessions so that consumers pay off as much of their outstanding debt as possible. Concessions can include a reduced interest rate on the amount they owe and the elimination of fees. Unfortunately, most credit card companies have become increasingly unwilling to significantly reduce interest rates for consumers in credit counseling. A study by the National Consumer Law Center and the Consumer Federation of America revealed that 5 of 13 credit card issuers increased the interest rates they offered to consumers in credit counseling between 1999 and 2003. American Express and Wells Fargo completely waive all interest for consumers in credit counseling. However, the majority of credit card issuers charge interest rates above 9 percent for account holders that enter into credit counseling, with several charging more than 15 percent.…”