BAPCPA – The Bankruptcy Abuse Prevention and Consumer Protection Act

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) was signed into law by then President Bush on April 20, 2005. It is the law for bankruptcies filed on or after October 17, 2005. The general purpose of BAPCPA was to toughen the rules for individuals seeking bankruptcy relief and was “bought and paid for” by the banking and credit card industries. Congress sought no input from most bankruptcy scholars and from no bankruptcy judges. As a result, the law is generally regarded by all sides as poorly written. It incorporates unnecessary requirements like pre-filing credit counseling and completion of a debtor education course. Statistics show that about 85% of the individuals who filed a Chapter 7 bankruptcy prior to the enactment of BAPCPA would still have qualified after the Act became law. The greatest complaint from debtors and their lawyers is that the additional required “busy work” has driven up the cost of filing bankruptcy by a few hundred dollars. Nevertheless, bankruptcy still provides “fresh start” relief to consumers struggling with debt.

Some of the Act’s more substantial stipulations include, but are not limited to, the following:

  • The number of debtors that can declare Chapter 7 bankruptcy is restricted through the implementation of a Means Test.
  • The allowed time between multiple filings is changed from six years to eight years.
  • Within 180 days prior to filing, a debtor must receive counseling from an agency approved by the trustee or bankruptcy administrator. The debtor must also complete a course dealing with finance management.
  • Protections provided by an automatic stay are limited in some re-filed cases and in eviction proceedings.
  • Notice requirements are stricter.
  • Exceptions to discharge have expanded.
  • A debtor’s ability to avoid liens is limited.
  • Limitations have been placed on homestead exemption.
  • Rules concerning property protection exemptions have changed.
  • New filing requirements and fees have increased both paperwork and costs.
  • Attorney liability and costs are higher. In addition, audits of bankruptcy filings may be conducted.
  • Small businesses have new Chapter 11 requirements that do not apply to large businesses.
  • Chapter 13 filers will have to repay an increased amount of their debt.
  • Creditors do not need court permission to attempt collections in some situations.
  • Chapter 12 bankruptcy (farm reorganization) is permanent and now includes family fishermen.

The attorneys at Parker & DuFresne are knowledgeable about the changes to bankruptcy law and the requirements set by BAPCPA. We will determine how they apply to your set of financial circumstances and then guide you through the ones that are applicable to your bankruptcy. In doing so, we hope to relieve you of some of the apprehension you may have about how BAPCPA affects your case.

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