ABI Funds Study to Test Effectiveness of Financial Education on Distressed Consumers
Alexandria, Va. — The American Bankruptcy Institute (ABI) Anthony H.N. Schnelling Endowment Fund has commissioned a study to test whether original, re-conceived consumer education materials have a positive effect upon the financial health of struggling individuals. Profs. Lois R. Lupica of the University of Maine School of Law, D. James Greiner of Harvard Law School and Dalié Jiménez of the University of Connecticut School of Law will be conducting the research. The empirical study “allows us to link the dollars spent on various legal interventions and the incidence of bankruptcy filings,” according to the researchers.
The study will be conducted over a two-year period and will examine 1,200 consumers who have been sued in credit card debt-collection proceedings in state courts. It will focus on the outcomes of three different means of assisting low-income persons in financial distress: (1) the provision of pro se educational materials (of original design); (2) an offer of assistance from a lawyer; and (3) financial education. “These pro se materials were developed in the recognition that there is a difference between having access to available information and being able to deploy this information,” according to the researchers.
The proposed educational materials to be utilized in the study cover a range of financial problems faced by consumers, including information addressing how to:
1) litigate a debt-collection action;
2) negotiate with creditors;
3) clean up a credit report;
4) address medical debt;
5) address utility debt;
6) file a successful chapter 7 bankruptcy case; and
7) bring an adversary action to challenge the nondischargeability of student loans.
Additionally, the researchers will test the effectiveness of statute-mandated financial counseling against “placebo” financial counseling.
“The study findings will provide important support for ABI’s mission to better understand the bankruptcy system, as well as for CARE’s [Credit Abuse Resistance Education] initiative to improve financial literacy,” according to the researchers.
Additional funding for the study is provided by the National Science Foundation, the National Conference of Bankruptcy Judges and the Sears Consumer Protection and Education Fund.
Created in 1989, the ABI Endowment Fund provides a secure financial base for insolvency research and education. Projects eligible for funding include research relating to bankruptcy or insolvency; surveys or other analytical investigation; the education of judges, court personnel, other governmental personnel and the general public; scholarships or other educational grants; and any other projects with a material research or educational benefit to the bankruptcy and insolvency community. More than $2 million in grants and scholarships has been awarded.
ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 12,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional conference information, visit http://www.abi.org/calendar-of-events.