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How Effective Was the BAPCPA?

In 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) to reform bankruptcy and in an attempt to make it more difficult for abusive bankruptcy filings to occur. By definition, reform should improve an unsatisfactory condition.

Forbes ran an article in 2012 that tax rebates boost bankruptcies. This fact suggests that tax rebates enable families to file bankruptcy who previously could not afford to file. In other words, the BAPCPA is stopping insolvent people from filing legitimate bankruptcies.

Professor Lois R. Lupica, Maine Law Foundation Professor of Law at the University of Maine School of Law, studied 11,221 Chapter 7 and 13 consumer cases filed between 2003 and 2009. These cases were a random nationwide sample of an estimated 12 percent of the consumer bankruptcy cases overseen in 90 judicial districts.

The National Association of Consumer Bankruptcy Attorneys (NACBA) reported the results of her study. The study found that the BAPCPA made bankruptcy more tedious and expensive than ever before:

  • Filing fees increased
  • Costs for debtor education class fees and credit counseling fees were added
  • Increasingly extensive paperwork resulted in higher attorney's fees
  • New attorney, trustee and court personnel duties and obligations increased costs
  • Attorneys must have higher legal skills, time and commitment to the work
  • Compensation did not always reflect the attorney’s excellence
  • The new bankruptcy system fights against best practices

According to U.S. Courts statistics, fewer people filed bankruptcy as of March 2012 compared with March of 2011. Numbers of bankruptcies filed are also lower than the 2005 figures. However, with the recent economic struggle, these lower statistics do not seem to indicate reduced abuse and success of the reform law, as much as they indicate problems with the system through roadblocks thwarting legitimate debtors from obtaining much needed relief.

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