accepting applications from organizations
seeking to become approved providers of
this new mandatory credit counseling.1 The
USTP also posted an application on its Web
site.2 The application and instructions
provided some surprises for industry
watchers, since a clear line was drawn
between those organizations that offer debt-
management plans (DMPs) and those that
don’t. Perhaps the most surprised was the
debt-management industry itself, which for
almost a decade had assumed it would be the
sole provider of this mandatory credit
counseling.
Another unexpected rule required DMP-
providing agencies to post “a surety bond
payable to the United States in an amount
that is the lesser of (1) two percent of the
agency’s prior year disbursements made
from trust accounts...or (2) equal to the
average daily balance maintained in all trust
accounts for the six months prior to
submission of the application.”3 Robert J.
Barrett, president and CEO of InCharge
Institute of America Inc., explained that the
bonding requirement for his organization
will be somewhere between $4-8 million.
There is a minimum bond requirement of
$5,000 for smaller agencies.4
Though not required
by BAPCPA, it would
appear that the USTP
thought it would be
prudent to place a
bonding requirement
on what some have
termed a problematic
industry. There is
some precedent for
this bonding, as §322(a)
requires that in order for a panel trustee “to
serve as a trustee in a case...such person has
filed with the court a bond in favor of the
United States conditioned on the faithful
JOURNAL
Issues and Information for the Insolvency Professional
The American Bankruptcy Institute 44 Canal Center Plaza, Suite 404, Alexandria, VA 22314-1592 • 703 739 0800
Credit Counseling:
BAPCPA’s Grendel
Written by:
Leslie E. Linfield
Institute for Financial Literacy
Portland, Maine
llinfield@financiallit.org
With the enactment date of the
Bankruptcy Abuse Prevention
and Consumer Protection Act of
2005 (BAPCPA) quickly approaching,
many consumer bankruptcy attorneys feel as
tho