Any bank doing business in Suffolk County will have to provide its customers with credit counseling under a new law that went into effect December 12. The law, "Enhance CREDIT Act," was introduced last month by S.C. Leg. Wayne Horsley (D-Lindenhurst) to give consumers information they need to make informed credit decisions.

"Banks have never before been required to educate consumers about the risk of negative risk," said Horsley. "This lack of information is tantamount to issuing a driver's license without evaluating one's ability to drive. In either case, someone will get hurt."

Poorly educated credit consumers, coupled by a major slowdown in the economy, has led to an increase in the number of bankruptcy filings on Long Island. During the first four months of 2008, 2,154 Long Islanders filed for bankruptcy, a 9.8 percent increase over the same period last year.

Chapter 7 bankruptcies accounted for most of the filings. This wipes out all debts and essentially gives the filer a fresh start. Chapter 7 filings totaled 1,456 from January to April, 2008, up 15.4 percent, compared to the prior September-to-December period.

Additionally, in April of this year, 184 Long Islanders filed Chapter 13, which gives filers an opportunity to put together a repayment plan and the chance to emerge from bankruptcy.

"When the economy is in recession, or even in subpar growth, all the borrowings that people made in the good times come back to haunt them," said Pearl Kamer, chief economist at the Long Island Association, which issued the statistics. Nationwide the country has experienced $2 trillion in lost market value and a recent report by the Consumer Federation of America (CFA), and Washington Mutual Bank indicates that two thirds of Americans, or 69 percent, do not understand that credit scores indicate the risk of not repaying a loan. The CFA report also shows that if all consumers raised their score by 30 points, the total annual consumer savings would be an estimated $28 billion.

The new law also helps to protect the public from "less reputable" credit counseling firms that advertise that they can reduce or eliminate debt but which, in some cases, work for the credit card companies.

"One problem people face is that they are given advice from credit mills," said Horsley. "They are not given good credit advice." This, said the lawmaker, can sometimes make the consumer's financial problems even worse.

Under the measure, the banks will provide consumers with a list of U.S. Department of Justice approved credit counseling agencies in the state, thus increasing access to reputable credit counseling for those in need.

"The result of this new measure will be more informed financialdecision making which will, over time, yield stronger credit markets in Suffolk," said Horsley.

The CREDIT Act will affect 16 banking institutions, including Bank of New York, JP Morgan Chase, Citibank, Commerce, Bank of America and Capitol One. The result will be access to credit counseling at literally hundreds of bank locations across Long Island.