GreenPath Urges Congress: Preserve Financial Counseling for Debtors Facing Bankruptcy
Financial Counseling and Education Never More Important
Farmington Hills, Mich., February 24, 2009 — GreenPath, Inc., in response to pending federal legislation, releases the following statement regarding the importance of credit counseling and financial education to people seeking financial success and, especially, to those facing debt, bankruptcy and housing foreclosure challenges. GreenPath’s CEO, Jane McNamara, made the statement today, in reaction to a clause in the legislation (specifically, HR-200/S61) that would alter the current bankruptcy code and exclude the credit counseling requirement for many — the very people GreenPath leadership are certain would most benefit from credit counseling.
“We are surprised that some members of Congress would consider waiving the credit counseling requirement for people facing such a serious financial challenge as a combined bankruptcy and foreclosure. It is particularly surprising today, just a week after President Obama announced his Homeowner Affordability and Stability Plan, a plan which references a credit counseling requirement for homeowners seeking financial assistance from the government to modify their mortgages and save their homes.
“We believe that waiving the counseling requirement for homeowners facing Chapter 13 bankruptcy in addition to foreclosure would be a serious mistake and that doing so would do a serious disservice to these consumers. In our experience, debtors facing Chapter 13 bankruptcy frequently fail to complete their repayment plans because that they do not have the financial education and tools they need to manage their finances. Because financial counseling and education can provide them with the tools that they need to succeed both in a Chapter 13 Plan and in their future, we urge members of Congress to preserve this critical requirement for those who need it most.
“For debtors who have never had a credit counseling session, there could be no better time for this one-on-one counseling and education. It is an opportunity to review and analyze household budgets, explore options, access available housing assistance, and obtain recommendations that can help them land on their feet and move forward to a brighter financial future, even if they do end up in foreclosure and/or filing for bankruptcy in the present. Anyone who cares about the financial wellness of American consumers should work aggressively to preserve financial counseling and education for Chapter 13 candidates. Congressional votes and constituent support for financial counseling are actions in support of American families.”
Currently, the Bankruptcy Code requires all prospective bankruptcy filers to first complete a mandatory credit counseling session with a United States Trustee-approved credit counseling service. Over 160 not-for-profit agencies provide immediate assistance to those seeking counseling, but in the event that immediate counseling is not possible for an individual or couple, those facing “exigent circumstances” can delay their counseling sessions. This ensures that the requirement helps these clients learn how to improve their financial circumstances without creating a time constraint for those who must file quickly in order to save their homes from foreclosure. As Congress considers re-working the code, GreenPath supports alternative language that extends the timeline for obtaining required, Trustee-approved credit counseling.