Enactment

• Work on BAPCPA began with the 105th Congress. However, it took multiple attempts for the bill to pass both the House of Representatives and Senate. The 109th Congress finally passed BAPCPA in 2005, with President George W. Bush signing the act into law on April 20th. It became known loosely as the New Bankruptcy Law.
  
  

Purpose

• BAPCPA was designed to reduce the number of bankruptcy filings in the United States. It made it harder to file for Chapter 7 bankruptcy and encouraged the dismissal of such filings in favor of Chapter 13. This was a benefit to creditors because Chapter 13 requires the repayment of at least some of the debts owed, while under Chapter 7 bankruptcy all debts are, essentially, cleared.
  
  

Means Test

• BAPCPA uses a means test to determine whether you're abusing the bankruptcy system. Under this test, the government looks at your income. They compare your income to the median income for your state. If the income is above the median for your state, they may find that abuse has occurred, since these figures give some indication of whether or not you should have been able to handle debts. In addition to the means test, the government looks at your entire circumstances and tries to figure out if you've purposely breached good faith agreements with creditors.
  
  

Limitations Outlined

• BAPCPA placed additional restrictions on those who file bankruptcy. The act extended the time between filings from six years to eight, meaning that you cannot liquidate your assets through Chapter 7 bankruptcy to pay debts as often. It also requires credit counseling to have your debts dismissed. BAPCPA limits stay protections, as well. In order to keep creditors from collecting your assets to handle your debts, you essentially have to show that the breach of your good faith agreement was not intentional. Creditors have extra protection under BAPCPA because the act requires you to give creditors proper notice of bankruptcy -- if you fail to do this, creditors won't necessarily be fined for violating a stay. Lastly, BAPCPA places limits on lien avoidance and homestead exemptions.
  
  

Advantages and Disadvantages

• BAPCPA encourages debtors to spend responsibly, with the credit counseling providing techniques to avoid additional debt and bankruptcy filings. This can help you maintain good credit. However, the added restrictions end up increasing the cost of filing, since there is more paperwork, and you may encounter more legal fees to verify your filing is justified. From the perspective of the creditor, the act requires creditors to carefully document and justify their claims against debtors, since improper motions can result in fines. Still, the act favors creditors in that it makes recovering some of the debt more likely through a transfer to Chapter 13.