What is the National Bankruptcy Reform Act?

The National Bankruptcy Reform Act, also known as the Bankruptcy Abuse Prevention and Consumer Protection Act, is a federal law that was passed in 2005. The purpose of this law was to help protect consumers from becoming victims of bankruptcy fraud and to encourage individuals to take more responsibility for their debts. It also established rules that creditors must follow when dealing with borrowers. The Reform Act changed many of the existing bankruptcy laws in Texas and other states. These changes provided more protection to consumers who are struggling with debt and made it more difficult for them to abuse the bankruptcy system. Some of the changes included a five-year "look-back" period which limited debtors from filing more than once in a five-year period, mandatory credit counseling, and the requirement for co-signers to be held liable for debts. In addition, the Act also made it more difficult for debtors to obtain bankruptcy protection from their creditors. It established an "automatic stay" which gave creditors more time to try and recover what was owed to them before the bankruptcy is discharged. Furthermore, the Act also created a Chapter 13 "means test" which established a maximum amount of money a debtor can have in order to be eligible for Chapter 13 protection. The National Bankruptcy Reform Act of 2005 was a major legislative change that significantly impacted the way that consumer bankruptcy works in Texas and the rest of the United States. Its purpose was to put more responsibility on debtors and to prevent abuse of the bankruptcy system. Although it has had many critics, it has largely been successful and has been a major factor in Texas’ robust economic recovery since the recession of 2008.

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What is the National Bankruptcy Reform Act?

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