Letter to the Editor

The article "Planning for Change: Credit Counseling at the Threshold of Bankruptcy"
(last month's <i>ABI Journal</i>) by Gordon Bermant and Ed Flynn of the EOUST
elevates the dialogue about credit counseling agencies and their place in a new world
of bankruptcy reform to a level of visibility our agencies haven't enjoyed before.
Gordon and Ed have invited me to provide a fuller context of our process with our
clients, since describing consumer credit counseling agency (CCA) underwriting
philosophy was beyond the scope of the article.

</p><p>The thought that CCA underwriting methods "...produce disposable incomes that are
much more likely to put the debtor at risk of an abuse claim" could be taken to
imply that we're funneling unknowing consumers into debt management plans when they are
the rightful customers of the bankruptcy industry. In the pre-bankruptcy reform
environment of today, we, of course, are not operating under the assumption that the
consumer is looking to collect his counseling compliance ticket and advance to
bankruptcy. Rather, consumers are looking to avoid it. This is an important
philosophical factor to remember when discussing where credit counseling fits into the
world of today and the value we bring.

</p><p>Further, the article appears to assume that consumers come to us ignorant about the
availability of bankruptcy as a fresh start. I assure you that is not the case.
Bankruptcy attorney advertising is now up there with dot-com mania in the public
consciousness. Okay, that might be an overstatement, but it's close.

</p><p>We've said for the past few years that the majority of our clients would sail through
any tests for bankruptcy relief, and even studied a small sample last year that
supported that contention. Luckily, Gordon and Ed's excellent study again corroborated
that. Our "industry" is actually very aware of the differences in cash-flow analysis
between our current practices and the IRS expense guidelines that would probably become
the means-testing standard under a new law. As far as I know, under the new law
CCAs will not be required to use the IRS expense guidelines. Nonetheless, Gordon
and Ed's article makes the excellent point that there's a gap in methodology, and under
the new law, consumers will need to be told this. CCAs will find it advisable to
disclose to consumers that even though they qualify for a debt management plan, it does
not preclude them from bankruptcy. For the record, the Council on Accreditation for
Children and Family Services, which audits and certifies this and many other Consumer
Credit Counseling Service agencies, mandates in their service delivery standards that
consumers be informed of all their options, and our network of accredited agencies
provides educational materials on the subject of bankruptcy.

</p><p>The hard-working, responsible people who come through our doors haven't yet gotten over
the mental obstacle that bankruptcy is just not the right thing for them to do at
that time (often though, it comes later). Another conclusion that could be made
here is that it goes to show you can't means-test personal commitment.

</p><p>Dianne L. Wilkman, President/CEO
<br>Springboard Nonprofit Consumer Credit Management
<br>(a.k.a. Consumer Credit Counseling Service-Riverside)

</p>