Counselling, education ‘can help people recover from bankruptcy’

February 24th, 2011 - 6:26 pm ICT by ANI  

Washington, Feb 24 (ANI): A recent study has found that counselling and education could help people recover from bankruptcy.

University of Illinois economist Angela Lyons, in direct partnership with Money Management International (MMI), carried out a multi-phase research study in 2009 to investigate the impacts of both the counselling and education requirements by tracking debtors through the entire bankruptcy process.

“We looked at about 4,000 debtors across the U.S. who filed for bankruptcy,” she said.

“We learned that the counselling and education requirements appear to be serving their intended purpose and are likely viable mechanisms to help debtors deal with their financial situation and get the fresh start that they need,” she added.

Lyons said the effects seem to be holding over time.

“Not only did most participants improve their financial behaviours after counselling, but they were carrying out those behaviours even 12 months later,” she added.

“Following bankruptcy, we found that many debtors were also starting to work toward longer-term goals such as saving more, starting an emergency fund, buying a car or home,” said Lyons.

“Debtors could benefit from additional education that helps them lay out a post-bankruptcy financial action plan to set personalized financial goals and then motivates then to achieve those goals,” she said.

The economist said there were still barriers to financial recovery.

“People who, post-bankruptcy, continued to face challenges with job loss, health, child care expenses, and unexpected house and auto expenses were significantly less likely to show improvements in behaviour,” she said.

Lyons said that from a policy perspective, the results of this study provided insight into whether the counselling requirement is working. (ANI)

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