Hindsight: The 2005 Bankruptcy Abuse Prevention &Amp; Consumer Protection Act's Unintended Effects on the Poor

Abstract

The Bankruptcy Abuse Prevention & Consumer Protection Act (“BAPCPA”), enacted in 2005, overhauled the Bankruptcy Code with the goal of reducing serial filers’ abuse of the bankruptcy system and to increase fairness to both debtors and creditors. However, debates in Congress did not focus on the potential effects on the poor because most of Congress believed bankruptcy was primarily a middle-class issue. Proponents of the BAPCPA believed that it would decrease losses to creditors, and in return the creditors would pass the savings to consumers. Opponents of the BAPCPA claimed that the legislation would harm the general interests of the consumer, and that a majority of individuals filing for bankruptcy were below the poverty level or filed bankruptcy due to medical expenses, job loss, or other sudden financial emergencies. Ultimately, the bill passed with the goal of reducing abuse of the bankruptcy system by requiring individuals abusing the system to repay their debts. This article seeks to address the changes set forth in the BAPCPA and how these changes have affected poor filers. With increased requirements and additional substantive hurdles, many poor filers will not be able to afford representation to navigate the requirements set forth under the BAPCPA. Additionally, with increased costs and hurdles, filers without representation have the increased risk of missing or incorrectly performing requirements, resulting in increased debt liability or the inability to have their debts discharged. This article will address the major changes to the BAPCPA and how each of these main changes have affected poor bankruptcy filers. Additionally, this article will briefly examine whether the stated goals of the BAPCPA have been met and the consequences of the BAPCPA on bankruptcy filers in general.