What is the Bankruptcy Abuse Prevention and Consumer Protection Act?

The Bankruptcy Abuse Prevention and Consumer Protection Act, or BAPCPA, is a federal law passed in 2005 that assists in preventing consumer bankruptcy abuse and protects consumers from practices by creditors or debt collectors that could lead to bankruptcy. It is applicable to individuals filing for bankruptcy in Oregon, and its purpose is to reduce consumer bankruptcy abuse while ensuring that individuals in genuine need access the protections of the bankruptcy code. The law sets out specific requirements for debtors to qualify for Chapter 7 or Chapter 13 bankruptcy protection, including means testing and mandatory credit counseling. Additionally, BAPCPA prohibits debtors from obtaining discharging of certain debts. It also increases the duration of Chapter 13 payments, making them last for five years, instead of three years as previously. Finally, BAPCPA provides additional protection for consumers by permitting creditors to file a “Reaffirmation Agreement” to reaffirm a consumer’s personal obligations for debts such as a mortgage or car loan. This agreement requires the debtor to remain liable for the debt even though it has been discharged in bankruptcy. In sum, the Bankruptcy Abuse Prevention and Consumer Protection Act was created to ensure that the bankruptcy system works for consumers by preventing bankruptcy abuse and providing the protections enabled by the bankruptcy code to those who truly need them.

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What is the Bankruptcy Abuse Prevention and Consumer Protection Act?

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