Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) as part of an overhaul to the bankruptcy process in the United States. It can be seen as a double-edged sword because it includes protection for both creditors and debtors.
BAPCPA tightened the reins on the Chapter 7 process that wipes out consumer debts entirely. One way this was done was through the introduction of the means test, which evaluates the debtors’ circumstances and either allows them to file for a clean-slate Chapter 7 bankruptcy or forces them to file under Chapter 13.
Lengthened the time between bankruptcy filings
Some people struggle all their lives with money management and file multiple bankruptcies over the years BAPCPA. Since the law was passed in 2005, debtors who file for Chapter 7 bankruptcy must wait at least eight years before they become eligible to file again.
Some debts became non-dischargeable
If you wonder why you can’t file bankruptcy on your student loans, BAPCPA is the reason. It also prevents wiping out any cash advances over $750 within the three months prior to your filing or over $500 in credit card charges for goods considered to be luxury items.
Benefit of BAPCPA
Many retirement assets like Roth IRAs now are protected from seizure when filing for bankruptcy. This is a big boon to consumers facing uncertain financial futures.
Don’t fret over your bills – file!
Filing for bankruptcy ends collection efforts and creditors’ calls. It can lend peace of mind to consumers and allow them to face the future either with a clean slate or a structured plan to repay their debts.