What is the Bankruptcy Abuse Prevention and Consumer Protection Act?

The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) is a federal law that was enacted in 2005 to promote financial responsibility and reduce abuse of the bankruptcy system. This law helps to protect consumer’s rights by making it harder to file for bankruptcy. It creates a “means test” which requires individuals to pass a test that shows they don’t have enough disposable income to pay their debts in order to file for bankruptcy. BAPCPA also requires a “credit counseling” session prior to filing and a “financial management” program after filing. In Texas, the BAPCPA also requires a debtor to provide additional information about their income and expenses before filing for bankruptcy. This information is then compared to the median income for a family of the same size in the debtor’s state to determine whether the debtor is eligible to file. The Act also includes an “automatic stay” which stops creditors from taking action against the debtor such as collection calls and repossessions. This stay provides a period of relief for the debtor until the bankruptcy is resolved. Overall, the Bankruptcy Abuse Prevention and Consumer Protection Act helps to protect consumer rights by making it more difficult to declare bankruptcy. It provides additional safeguards and safeguards other forms of debt relief that help give debtors the chance to get back on their feet.

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What is the Bankruptcy Abuse Prevention and Consumer Protection Act?

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