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Declaring bankruptcy today means taking a credit counseling class. The class is supposed to help debtors review their finances and consider repayment options. However, according to a Knight Ridder Newspapers story, the classes may be too little too late.

According to those who have been through the classes, made mandatory after bankruptcy laws changed in October of 2005, the classes themselves are vague, with little real actionable information. They also don’t suggest a better alternative than filing for bankruptcy court protection – which most consumers filing bankruptcy do any way.

Experts say there’s a basic problem with the credit counseling provision of the bankruptcy law: It's too late by the time many consumers get counseling. They're already in dire financial straits, with debts far outweighing income, and they have no choice but to file for bankruptcy.

"Early on, most of the pre-bankruptcy counseling is not especially useful because it's only occurring for people right before they go into bankruptcy," Steve Bartlett, president of an industry association called the Financial Services Roundtable, said. "The flaw is that the bankruptcy counseling is only occurring at the end of the process when you have little option. That's not what we wanted or the agencies wanted."

Source: Knight Ridder Newspapers
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