23, enacted April 20, 2005) is a legislative act that made several significant changes to the United States Bankruptcy Code.

Some of the bill's more significant provisions include the following: Prior to the BAPCPA Amendments, debtors of all incomes could file for bankruptcy under Chapter 7.

Congress amended this section of the Bankruptcy Code to provide for the dismissal or conversion of a Chapter 7 case upon a finding of "abuse" by an individual debtor (or married couple) with "primarily consumer debt".

Generally, the larger the family, the greater the applicable median income figure and the more money the debtor must earn before a presumption of abuse arises.

§ 707(b)(2)(A), (ii)-(iv) and include: An itemized list of the applicable IRS living standards can be found at the US Trustee's website.

For example, if a debtor had exactly $109.59 of "current monthly income" left after deductions and owed less than $26,300 in general unsecured debt, then the presumption of abuse would arise, [see 11 U.S.C. § 707(b)(2)(A)(i)].

Section 109(h) provides that a debtor will no longer be eligible to file under either chapter 7 or chapter 13 unless within 180 days prior to filing the debtor received an "individual or group briefing" from a nonprofit budget and credit counseling agency approved by the United States trustee or bankruptcy administrator.

Yet anecdotal evidence suggests that by the time most clients receive the counseling, their financial situations are dire, leaving them with no viable alternative to bankruptcy.

Because no mechanism currently exists to track the outcomes of the counseling, policymakers and program managers are unable to fully assess how well the requirement is serving its intended purpose.The automatic stay in bankruptcy is the result of Section 362 of the Bankruptcy Code that requires all collection proceedings to stop.

The provision presumes that the repeat filings are not in good faith and requires the party seeking to impose the stay (usually the debtor) to rebut the presumption by clear and convincing evidence.

The stay does not stop an eviction proceeding if the landlord has already obtained a judgment of possession prior to the bankruptcy case being filed, § 362(b)(22).

In either situation the landlord must file with the court and serve on the debtor a certificate of non-applicability of the stay spelling out the facts giving rise to one of the exceptions.

[7] BAPCPA enacts a provision that protects creditors from monetary penalties for violating the stay if the debtor did not give "effective" notice pursuant to § 342, [§ 342(g)].

Thus, if a debtor purchases any single item for more than $500 within 90 days of filing, the presumption that the debt was incurred fraudulently and therefore non-dischargeable in the bankruptcy arises.

BAPCPA amended § 523(a)(8) to broaden the types of educational ("student") loans that cannot be discharged in bankruptcy absent proof of "undue hardship."

These provisions were largely intended to prevent filers from forum shopping, i.e. moving assets and domiciles to a state with more favorable exemptions and filing.

The new law adds a number of new requirements for bankruptcy filers that attempt to make the filing process more difficult and costly.

[13][14]In the years since 2000, the bill was introduced in each Congress, but was repeatedly shelved due to threats of a filibuster from its opponents and because of disagreements over various amendments, including one backed by Senate Democrats that would have made it harder for anti-abortion groups to discharge court fines related to legal debts incurred from lawsuits filed by pro-abortion groups.

[16] According to George Packer in his book The Unwinding, Joe Biden, Chris Dodd, and Hillary Clinton helped pass this bill.

[26] Harvey Miller, one of the most-prominent bankruptcy attorneys in the country (particularly in terms of representing corporate debtors) has described BAPCPA as "ill-conceived.

These arguments were bolstered by an in-depth study and survey of 1,771 bankruptcy cases by scholars at Harvard University, of whom 931 submitted to interviews.

[28] Perhaps the most controversial provisions of the bill was the strict means test it established to determine whether a debtor's filing under Chapter 7 of the bankruptcy code would be considered as an "abuse" and therefore subject to dismissal.

Critics of the means test, which is triggered if a debtor makes more than their state's median income, argued that it ignored the many causes of individual bankruptcies, including job loss, family illnesses, and predatory lending, and would force debtors seeking to challenge the test into costly litigation, driving them even further into debt.

[2] These criticisms were partly borne out in the months following the new law, as lawyers have reported that the bankruptcy process has become significantly more arduous, forcing them to charge higher fees and take fewer clients.

[32] Jim Sensenbrenner, Republican chairman of the House Judiciary Committee claimed: "If someone in Katrina is down and out, and has no possibility of being able to repay 40 percent or more of their debts, then the new bankruptcy law doesn't apply.

[33] The United States Trustee program has since said it would not attempt to enforce the means test rules for disaster victims, including those affected by Hurricane Katrina.

[34] The Justice Department Trustees oversee the administration of bankruptcy law and are able to file the motions necessary to enforce the means test.

"[36] This radically altered the historic process of paying off creditors and did so just a few years prior to trillions of dollars in assets going into liquidation as a consequence of bankruptcies following the 2007–2008 financial crisis.

Institutions who provided short-term funding to financial firms such as Bear Stearns and Lehman through repo lending could abruptly withdraw that funding even if it risked pushing the firms into bankruptcy, because they did not have to worry about tying up their claims in bankruptcy court, due to the new safe harbor provisions of BAPCPA.

[citation needed] Taylor, Taru, Biden’s Unconstitutional “Bankruptcy Abuse” Act Makes Peons of Student Debtors, Truthout, retrieved July 24, 2023