Bankruptcy Abuse Prevention and Consumer Protection Act: How the new bankruptcy laws effect you.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was passed by Congress on April 14, 2005 and signed into law by President George W. Bush on April 20, 2005. Most provisions of the act apply to cases filed on or after October 17, 2005. Referred to colloquially as the “New Bankruptcy Law”, or “BAPCPA” (Bap-Seepa) the Act of Congress attempts to, among other things, make it more difficult for some consumers to file bankruptcy under Chapter 7.Some of these consumers may instead utilize Chapter 13. You can still file bankruptcy. Most people are still able to keep most of their property while discharging most of their debts.

Then what did BAPCPA do?

The three most noticeable changes were the addition of the means test, expanded waiting period between filings and the required credit counseling.

  1. The means test was designed to limit the use of Chapter 7 bankruptcy to those who truly can’t pay their debts. If you make more than the average income in your state, you may not be eligible to file chapter 7 bankruptcy.
  2. The waiting periodbetween filings was expanded so that you have to wait 8 years between chapter 7 bankruptcy filings.
  3. There are also two sets of credit counseling now required to successfully complete a bankruptcy.

Most of the remaining changes made by BAPCPA are procedural adjustments that create more hoops to jump through but do not limit the protection available to you through a bankruptcy filing.