The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) Law and Legal Definition

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, is a law enacting several significant changes to the U.S. Bankruptcy Code. It was passed by the 109th United States Congress on April 14, 2005 and signed into law by President George W. Bush on April 20, 2005. The provisions of the new laws became effective for cases filed on or after October 17, 2005.

One of the significant changes brought by the new law is that it introduced a means test to the existing eligibility requirements for filing a bankruptcy case. The means test is a financial analysis which consists of taking one's current monthly income (defined as anything received in the six months prior to filing the bankruptcy case, excepting certain specific types such as social security income) and then subtracting out certain pre-set expenses set forth by the Internal Revenue Service for living expenses. The "means test" helps to determine whether an individual debtor's chapter 7 filing is presumed to be an abuse of the Bankruptcy Code requiring dismissal or conversion of the case.

Some of other significant changes brought by BAPCPA are:

  • Waiting Period between filings: BAPCPA increases the number of years that a person must wait in between filling Chapter 7 cases. The period has increased from 6 to 8 years in between filings. New waiting periods in between the filings are also imposed on some of the Chapter 13 cases.
  • Mandatory Credit Counseling: Under BAPCPA, applicants must obtain credit counseling before filing for Chapter 7 bankruptcy. This must be done 180 days before filing and the counseling must come from an approved agency.
  • Automatic Stay: Automatic stay is a court procedure that instructs creditors to stop collecting from debtors until the proceedings are completed. BAPCPA limits the availability of this procedure based the number of times a case is filed.
  • Non-dischargeable debts: The new law also makes more types of debts "non-dischargeable. Therefore, more types of debts are shifted from Chapter 7 to Chapter 13 status.
  • Chapter 13 Bankruptcy: BAPCPA changes the way that courts calculate total repayment debt using disposable income and other figures. Previously, judges had much discretion in determining their calculations. Under the Act, judges must now follow stricter guidelines set forth by the IRS.