Many Americans first learned about the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 when, in October 2005, they saw news reports showing lines of debtors outside of the nation’s bankruptcy courts, anxiously waiting to file their petitions before the new law went into effect.
Many people watching those stories — including many attorneys — came away with the impression that, after Oct. 17, 2005, Chapter 7 bankruptcy would no longer be available. The BAPCPA has made filing a Chapter 7 (liquidation) bankruptcy more difficult. But the difficulties are almost entirely procedural, not substantive. And for those who need bankruptcy relief the most, the BAPCPA actually included important safe harbor provisions that limit its impact — on indigent debtors as well as the pro bono attorneys who would help them. Even the most dreaded provision of the new BAPCPA, the so-called “means test,” while imposing burdensome new documentation requirements, does not, in the end, pose a substantive bar to more than a tiny fraction of debtors who could have obtained Chapter 7 relief before the passage of the BAPCPA.