Blog sponsored by Bankrupt-Law.com



BYLINE: Erika Brown

Uncle Sam is helping people make money off those who are bankrupt.

It's been a year since the effective date of a bankruptcy law intended to
curb filings by individuals. Hard to say yet if it's working, but a bunch of
people who aren't bankrupt are making money off it. Some 275 individuals and
organizations have lined up to become "debtor education providers" to take
advantage of the law's requirement that debtors take a two-hour financial
advice class. These folks must already be certified financial planners,
public accountants or, strangely enough, teachers of any subject (including
gym?). They charge from $50 to $75 for the two hours, whether over the
phone, in person or on the Internet. The idea is that with proper training
debtors will learn how to manage money and not end up in bankruptcy court
again.

Kevin Chern left a lucrative job as a partner in a law firm in Chicago last
year to set up a Web financial planning course. On his site, animated
talking heads guide debtors through bits of advice ranging from the
painfully obvious ("Do not write a check when you know you do not have the
funds to cover it") to the elementary ("If your car is expensive to operate
and maintain, sell it and purchase a less expensive vehicle"). Chern says
his company, Start Fresh Today Instructional, has sold "thousands" of
Department of Justice-approved courses at $50 apiece.

Robert Laura, who is based in Southfield, Mich., runs the Financial Karma
Web site. For $65 the accredited asset management specialist will sign you
up for his course and send you his book, which prompts bankrupt folks to ask
themselves whether a purchase is a "want" or a "need." Laura also suggests
keeping a spending record and saving for emergencies. It's good counsel, but
even Laura has some doubts. "You can't change a person's behavior in two
hours," he says. "Without any follow-up or further education, it seems easy
for debtors to return to their old ways."

The National Association of Consumer Bankruptcy Attorneys says 79% of people
who filed for bankruptcy since last October were in debt from circumstances
beyond their control, such as death of a spouse, loss of a job or big
medical expenses. Paula Hamilton of Livermore, Calif. took a two-hour
personal finance course in June after filing for bankruptcy. The Web program
by Consumer Credit Counseling of Kern County taught her that credit cards
were dangerous and saving money was a good idea, not exactly new insights
for Hamilton, 52. "I budgeted, I tried to save for goals. I even had good
credit," she says. What did her in, she says, was trying to support her
15-year-old daughter on $28,000 a year while paying off lawyers' fees in a
child support fight. "I had no choice but to file for bankruptcy," she says.


"I was facing homelessness."