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April 2008

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This article is in the news archives --- for current news go to the Third Branch News.


Courts Fight Financial Illiteracy

In every economic downturn there's a chorus of admonitory voices with advice to those deep-in-debt. But over the years, one group has consistently spread the message of financial responsibility. They're the judges, court staff, and practitioners in the bankruptcy community who see the consequences every day of poor financial management.

"I couldn't sit in this court any longer watching people who had ruined their lives because they were financially illiterate. Nobody was teaching them," said Bankruptcy Judge John C. Ninfo II of the Western District of New York. Ninfo created CARE, the Credit Abuse Resistance Education program, to teach the wise use of consumer credit to the group most at risk for credit abuse—high school seniors and college freshmen.

In 1997, Ninfo began by spending his own dime and time to reach out to students with a message of financial literacy. Why students? "They're 18 years old and they're being bombarded with credit card offers for the first time," he said. "They're hungry consumers, and they're getting their first taste of freedom. They're the ones who are really at risk. They treat a credit card as if it's an ATM machine on somebody else's account. They don't even think of it as debt." Ninfo has the experience to convince them otherwise.

It's not just students who fail the financial literacy test. "After interviewing hundreds and hundreds of debtors in my court," he said, "and asking them how they could end up with two, three, or four times their annual income in credit card debt, with cars that were worth less than the money they owed on them, I'd ask them, 'Didn't you have a budget? Didn't you have savings for an emergency or understand the true cost of credit with 20 percent interest—especially if you were only making minimum payments? Didn't you do the math on some of these things?' Most said they'd never had any kind of personal financial education."

In presentations to student groups, Ninfo and other CARE presenters illustrate their message of financial responsibility with the stories of the people they see in bankruptcy court.

"One of the things I tell students is that it's not about your academic IQ," Ninfo says, "it's about your financial IQ. Because every day in bankruptcy court I see professionals like doctors, engineers, lawyers and teachers by the dozens, who don't have a clue about their finances."

By 2002, Ninfo realized he couldn't get into enough schools alone and contacted his local bar association to see if they would take on an outreach program. Twenty lawyers signed up and the formal CARE program was begun. Then Chief Judge John Walker in the U.S. Court of Appeals for the Second Circuit encouraged the courts in his circuit to start CARE programs. From there, a national program grew. Today, CARE has a presence in all 50 states and the District of Columbia. Programs are conducted by bankruptcy judges, bankruptcy trustees, private attorneys and court staff.

CARE's message also targets members of fraternities and sororities through its GLAD (Greeks Learning to Avoid Debt) initiative, and other college students through the SIFE (Students in Free Enterprise) initiative. CARE's website at www.careprogram.us has schedules on where CARE programs are offered, new initiatives, a variety of materials that presenters can use, and information on starting your own program.

Over the last four years, Ninfo has promoted CARE to as many bankruptcy professionals and communities as possible. "We're trying to reach kids, one student at a time," he said. "We have this unique knowledge and experience of dealing with the worst consequences of our national epidemic of financial illiteracy. We can use our knowledge to be proactive and do something to change these kids' lives, instead of cleaning up the mess when, 10 years later, they come before us in bankruptcy court. I'm so proud of the many people in the bankruptcy community who have taken up this challenge. They are really making a difference."

Throughout the federal Judiciary many courts conduct bankruptcy outreach programs.

Bankruptcy Clerk of Court Therese Buthod in the Eastern District of Oklahoma has developed a presentation combining materials from the CARE program and the Judiciary's website, with instructional games and a PowerPoint presentation. In the Western District of Tennessee, Bankruptcy Judge G. Harvey Boswell and Deputy-in-Charge Rugena Blivins conduct twice yearly programs on bankruptcy in local high schools, using materials from the Judiciary's website.

In the Middle District of Tennessee, Chief Judge Todd J. Campbell reaches out to high school students with programs on bankruptcy and in the Bankruptcy Court for the Western District of Missouri, Chief Bankruptcy Judge Dennis Dow started a training program to prepare volunteer attorneys to teach financial literacy in the classroom.

The National Conference of Bankruptcy Judges also supports financial literacy for students, with many of its members participating in CARE programs.

For the general public, the federal Judiciary's website offers a primer on bankruptcy, called Bankruptcy Basics, at www.uscourts.gov/bankruptcycourts/bankruptcybasics.html, with information on federal bankruptcy laws, an explanation of the different chapters of bankruptcy, and answers to some frequently asked questions.

A program designed for high school students, called Your Day in Bankruptcy Court, is available on the Judiciary's website, www.uscourts.gov/outreach/programs/bankruptcy.htm. It is designed to be used with the CD-ROM Bankruptcy: Don't Let it Happen to You, created by the National Conference of Bankruptcy Judges. The program leads students through a series of scenarios that illustrate some common financial pitfalls, the bankruptcy process, and the possible consequences of filing for bankruptcy.