What is the Bankruptcy Abuse Prevention and Consumer Protection Act?

The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) is a federal law enacted in 2005 to make it harder for individuals to file for bankruptcy. The main purpose of the act is to reduce the number of cases in which people file for bankruptcy, primarily by requiring individuals to seek credit counseling and debt management help before filing for bankruptcy. The law also restricts consumer options by limiting some forms of bankruptcy filing. In Nebraska, BAPCPA applies to both Chapter 7 and Chapter 13 bankruptcies. Under the law, those who file for bankruptcy must first complete an instruction course in credit counseling. The credit counseling must be done before the individual can file, and must be completed by an authorized non-profit organization. Individuals must also complete a financial management course before filing. In addition, BAPCPA restricts the ability of individuals to convert their bankruptcy cases from Chapter 7 to Chapter 13. Generally, individuals can only convert their case if it has been five years since their previous bankruptcy. This reduces the ability of debtors to use bankruptcy to quickly discharge their debts. The goal of BAPCPA is to prevent individuals from abusing the bankruptcy process. By imposing restrictions and requiring education, the act discourages individuals from relying on bankruptcy as the primary means of resolving debt issues. At the same time, the law ensures that debtors who need to file for bankruptcy can still do so.

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What is the Bankruptcy Abuse Prevention and Consumer Protection Act?

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