The National Foundation for Credit Counseling released its report on how its member agencies have handled the first year of required credit counseling and financial education. The report is based on surveys completed in September 2006, and offers several insights on how these BAPCPA changes are playing out. For example, while phone and Internet counseling are dominant, a decent proportion of debtors are participating in face-to-face sessions (15% for pre-filing credit cousenling and 38% for pre-discharge financial education). Interestingly, if you attend face-to-face education, your session is substantially shorter in length than if you complete the education through the Internet.

The big news is the funding deficit the agencies report from providing bankruptcy-related counseling. Waivers of fees were given in about 15% of cases, and apparently even when fees are collected for pre-filing counseling, the agencies report a shortfall of about $12 in providing each session. Will these agencies raise their fees? If so, will more debtors apply for waivers, setting off another round of raising fees to cover shortfalls? The credit counseling industry has its share of other problems, including heat from the IRS over non-profit status of many agencies. Budget woes will present an interesting challenge for the groups. Should charitable foundations or groups such as the United Way donate to these agencies? Should the government fund the "mandate" for counseling or education from court filing fees? Is this problem just a variant of the so-called "bankruptcy tax"–debtors can’t pay and we collectively bear the cost?