What You Need to Know about the BAPCA

The BAPCA is the acronym for The Bankruptcy Abuse Prevention and Consumer Protection Act. It was passed into effect in 2005 and resulted in a number of changes to the existing bankruptcy laws. The law made it more difficult to file for bankruptcy, which was done in an attempt to prevent people from filing multiple times. The goal was to also protect consumers from predatory behavior related to bankruptcy.

Prior to 2005, there were consumers abusing the bankruptcy system. Chapter 7 filers would file multiple times, allowing them to run up debts with the intention of filing and wiping out those debts. Bankruptcy was able to be used as a tool to avoid paying debts, as opposed to a tool to get a fresh start. People were accumulating debt with the intention of filing, not filing because they found themselves in unexpected circumstances.

Changes that Resulted from the BAPCA

Obviously credit card companies were in favor of the new law because it limited the number of opportunities consumers had for discharging their debt.

As a result of the BAPCA, debtors filing for Chapter 7 bankruptcy:

• Have to pass a means test
• Complete credit counseling before filing and financial management before debts are discharged
• Live in one location for a certain period of time before filing (requirements vary from state to state)
• May not file more than one time in eight years for Chapter 7 or within six years for Chapter 13

Ultimately, the BAPCA helps limit opportunities for bankruptcy fraud, so unless you intended to commit fraud, you likely won’t experience that much of an effect from the law. As a matter of fact, the law has done little to reduce the number of bankruptcy cases filed each year, despite predictions from experts that it would.

Additionally, the law prevents people who shouldn’t be filing from doing so because they are pressured into the decision by a predatory bankruptcy “expert.” Bankruptcy can be a perfectly acceptable option for those who are struggling financially.

For more information about the BAPCA, check out this information from Investopedia.

Is Bankruptcy Right for You?

Both Chapter 7 and Chapter 13 can help you reset your situation and get a fresh start, but they aren’t the right option for everyone. A true bankruptcy expert will review your situation carefully and help you reach the best decision based on your circumstances. For some, this is absolutely bankruptcy, but for others, alternatives are the better option, at least temporarily.

One of the primary reasons debtors filing for bankruptcy must attend credit counseling is to help them make the best decision for them. Before filling, it’s important to understand your options and feel confident with whatever decision you make. If you ever feel as if you are being pressured into filing, it’s best to take a step back and evaluate your situation before moving forward.

If you’d like more information about the BAPCA or you would like to speak to someone about filing for bankruptcy, we can help. Contact the Law Offices of Robert M. Geller at 813.254.5696 to schedule a consultation.