Teaching dangers of credit is critical

Bankruptcy judges, lawyers teaming up for financial program

 

Mar. 10, 2008 12:00 AM

Editor's note: This article was submitted by Jennings, Strouss & Salmon. Send your education news to lori.baker@arizonarepublic.com.

Arizona bankruptcy attorneys and judges are taking their experience - and their concerns about financial responsibility and credit - to a group of people most at risk: youth.

"The simple fact is, we'd rather see them in a classroom than have to stand next to them in a courtroom," said Carolyn Johnsen, chair of the Bankruptcy Group at Jennings, Strouss & Salmon and a member of Arizona CARE (Credit Abuse Resistance Education), a program designed to teach high-school and college students about the dangers of using too much credit.

Students at Barry Goldwater, South Mountain, Corona del Sol and Mountain Pointe high schools and members of the Kappa Alpha Psi fraternity at Arizona State University are among those who have heard the messages.

According to , in 2001 nearly one of five Americans declaring bankruptcy was between 18 and 24. The U.S. Senate Committee on Banking, Housing and Urban Affairs reported in 2002 that the fastest-growing group of bankruptcy filers are 25 or younger.

The CARE program was created by U.S. Bankruptcy Judge John C. Ninfo II in the Western District of New York who didn't like what he was seeing among young people facing him in the courtroom.

Now in 47 states, the program is taught by bankruptcy lawyers and judges. The presentation and discussion covers topics including: how credit cards work, what is good credit, what happens when credit is misused; as well as teaching about savings, creating a budget and living within their means.

Arizona Bankruptcy Judge George Nielsen, a frequent presenter, is very clear with the students he teaches: "I don't want to see you in my court," he says, describing the CARE program as "financial freedom." "You will have the freedom to make all of the spending choices you want if you will live within your means," he tells students.

Presenter Cary Forrester said the student's reaction was appropriate, but only the first step in fending off what he calls predatory lending practices including paycheck and auto-title loans. "These practices cost the consumer enormous amounts in interest, are nearly impossible to repay and lead to serious consequences including bankruptcy," Forrester said.

"Employers, landlords and schools have relatively easy access to credit reports and often make decisions based on what they find," he said.