Debtor education, financial literacy, and pending bankruptcy legislation

This paper reports on an evaluation of a financial education-training program for residents of New York who had filed for bankruptcy. Over 400 individuals divided into three groups (trained debtors, untrained debtors, and non-debtors) completed identical questionnaires approximately three months apart. Trained debtors took the pretest before training and the post-test after training. Results revealed that trained debtors' financial knowledge increased after training compared with untrained and non-debtors. Trained debtors showed more negative attitudes towards unnecessary spending compared with the other two groups and reported less intention to buy than non-debtors reported. Self-reported behaviors showed significant changes in the desired direction for trained debtors' use of credit cards (i.e. number owned, purchases, and balance amount), paying bills, budgeting, and borrowing from predatory lenders. Implications for pending legislation are discussed.