Part I of XI
Written by Beckett Cantley and Geoffrey C. Dietrich
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.
II. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 6
a) Increased Administrative Burden In General 6
b) Attorney Due Diligence Requirements 6
e) The Personal Financial Management Course Requirement 7
(a) Cutoff Dates for Means Test Calculations 10
(2) Length and Monthly Payment Amounts Under Chapter 13 Repayment Plans 10
b) Provisions Intended to Curb Serial Filings 11
(1) Waiting Period Between Filings 11
(2) Automatic Stay Limitations 11
c) Automatic Stay Limitations Intended to Minimize a Landlord’s Risk of Loss From Tenant Waste 12
d) Expanded Exceptions to Discharge 13
1. The General Statistical Effects of the BAPCPA 13
a) Increases in Total Costs to Chapter 13 Bankruptcy Consumers 13
(1) Chapter 13 Attorney Fee Increases 13
b) Increases in Total Costs to Chapter 7 Bankruptcy Consumers 14
c) Potential Mitigation of Total Costs Through Fee Waiver 15
d) Post-BAPCPA Pro Bono Representation 15
e) The Effectiveness of Pro Se Filings 16
f) General Statistics and Trends Relating to Poor and Minority Debtors 17
(1) Filing Levels After the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 18
(2) Disproportionate Rates of Chapter 13 Filings Among African-Americans 19
(3) Judicial Bias Towards African American Debtor in Chapter 13 20
g) The Truth Behind the Banking and Credit Card Lobby 20
2. The Effect of Procedural Amendments on a Poor Debtor’s Accessibility to the Bankruptcy System 21
a) Increased Paperwork and Attorneys Fees 21
b) Bankruptcy System Inefficiency and the Carousel of Rising Costs 22
c) The Effect of Procedural Amendments Upon Poor Victims of Disasters 23
3. The Effect of Substantive Amendments on a Poor Debtor’s Accessibility to the Bankruptcy System 23
a) The Indirect Effect of the Means Test 23
b) The Effect of Lengthy Repayment Plans Upon Chapter 13 Attorney Fees 24
a) The Effect of Repayment Plans on Poor Chapter 13 Debtors 25
b) The Effect of Prolonged Waiting Periods Between Successful Filings Upon the Poor 27
c) The Effect of an Expanded Exception to Discharge For Credit Card Cash Advances Upon the Poor 27
d) The Effect of Automatic Stay Limitations in Eviction Proceedings Upon the Poor 28
This is the first of eleven installments of this article. The entire article may be found at www.cantleydietrich.com.
