National Foundation for Credit Counseling Members Gear up for New Bankruptcy Law; Counseling Sessions Expected to Double.

SILVER SPRING, Md. -- The National Foundation for Credit Counseling (NFCC) said today that its members expect to provide more than twice as many counseling sessions as previously in the next 12 months as a result of the new federal bankruptcy law. It also said that all of its 115 member agencies plan to seek government approval to provide bankruptcy-related counseling and education services in conjunction with the new law. The agencies deliver services through more than 1,000 community-based branch offices nationwide.

"The new law offers a historic opportunity for credit counseling agencies to help millions of Americans take control of their financial affairs," NFCC President and CEO Susan C. Keating said. "Our member agencies are recognized for high quality service that puts consumers' interests first. We will remain true to that ethic as we meet the new requirements."

Keating also noted that the growing client load will present significant and costly challenges.

"We will have to double our capacity. That means NFCC agencies must expand their infrastructure, develop new course materials, and hire and train more than 1,050 additional financial counselors," Keating added. "The measures needed to build capacity are already under way."

She said an internal survey of the NFCC's member agencies shows that during the new law's first year, the agencies expect to provide about 780,500 pre-filing counseling sessions to individuals who are considering bankruptcy and another 536,300 pre-discharge education sessions to individuals who have filed for bankruptcy but are waiting for their debts to be discharged. Those sessions would be in addition to NFCC member agencies' non-bankruptcy counseling sessions, which totaled nearly 800,000 in 2004.

The Bankruptcy Abuse Prevention and Consumer Protection Act, enacted in April of this year and set to take effect on October 17, 2005, requires for the first time that individuals receive credit counseling before filing for bankruptcy. The law also requires an additional education course before debts are discharged.

"Pre-filing counseling will give consumers the knowledge they need to make an informed choice about their financial future and whether to file for bankruptcy," Keating said. "Pre-discharge education for those who file for bankruptcy is designed to ensure that they make the most of their fresh start by giving them the tools to successfully manage their finances."

According to the survey, all NFCC member agencies plan to seek approval from the Executive Office of the U.S. Trustees (EOUST) or the Administrative Office of the U.S. Courts (AOUSC) to provide either or both pre-filing counseling and pre-discharge education. The overwhelming majority of the agencies plan to offer both services. The law requires agencies to receive approval from one of those offices to provide the required counseling and education. The EOUST is the approval body for agencies in every state except Alabama and North Carolina, which are under the jurisdiction of the AOUSC.

The agencies say they will offer face-to-face, telephone, and Internet counseling, but they expect face-to-face and telephone counseling to remain the predominant delivery methods.

The NFCC, the nation's largest and longest serving nonprofit credit counseling organization, was founded in 1951. Its 115 member agencies provide a range of counseling and education services at more than 1,000 community-based locations throughout the United States and Puerto Rico. All NFCC member agencies are nonprofit entities that are independently accredited by the Council on Accreditation (COA) and observe the highest ethical and quality standards.

Survey of NFCC Member Agencies on Preparations for New Bankruptcy Law

Survey Background

--  Survey of full NFCC membership (115 agencies with more than 1,000
    local offices across the U.S. and Puerto Rico) to determine their
    plans for addressing the counseling and education provisions of
    the new bankruptcy law.

--  Survey was designed to help the NFCC and its member agencies
    assess the impact of the new law and to identify incremental
    staffing and infrastructure requirements to handle increased
    service demand created by the law.

--  Survey was fielded August 3-24, 2005. All 115 NFCC agencies
    responded.

Key Findings

--  Participation. All 115 NFCC member agencies say they intend to
    apply to the Executive Office of the U.S. Trustees or to the
    Administrative Office of the U.S. Courts (Alabama and North
    Carolina fall under the AOUSC) for approval to provide bankruptcy
    counseling and education under the new law.

    --  The overwhelming majority of NFCC agencies intend to offer
        both pre-filing counseling and pre-discharge education. A
        small number of agencies say they may provide pre-filing
        counseling only.

--  Mix of Delivery Mechanisms. The agencies believe that a majority
    of counseling sessions will continue to take place in person. The
    projected mix of delivery mechanisms is projected to conform to
    the current pattern, which is roughly:

    --  51% face-to-face
    --  39% phone
    --  10% Internet

--  Projected Growth in Demand for Services. The NFCC agencies expect
    the number of counseling sessions they provide will more than
    double as a result of the new bankruptcy law. Estimated
    bankruptcy-related services are projected at:

    --  780,500 pre-filing counseling sessions
    --  536,300 pre-discharge education sessions

--  New Staffing Requirements. Members forecast that they will hire
    more than 1,050 additional full time employees to support
    projected counseling and education volume.

    --  Hiring is projected to be front loaded in September-November
        2005 to train and prepare for increased service demand as
        consumers grow accustomed to the new law.