Bankruptcy Abuse Prevention And Consumer Protection Act - BAPCPA

AAA

DEFINITION of 'Bankruptcy Abuse Prevention And Consumer Protection Act - BAPCPA'

Legislation enacted by President George W. Bush in 2005 that revised the bankruptcy code for cases filed on or after October 17, 2005. The act created a means test that determines whether individuals filing for bankruptcy can file for chapter 7 bankruptcy, which discharges many debts in full, or whether they must opt for chapter 13 bankruptcy, which requires at least partial repayment of debts. Further, the act increased the waiting period from when an individual last filed chapter 7 bankruptcy to when they may file again.

INVESTOPEDIA EXPLAINS 'Bankruptcy Abuse Prevention And Consumer Protection Act - BAPCPA'

Essentially, the purpose of the act was to make it more difficult to qualify for chapter 7 bankruptcy by more closely examining the filer's ability to repay their debts. The means test compares the debtor's monthly income to the median income in his or her state of residence and provides an allowance for assumed monthly expenses, at rates determined by the IRS, as well as an allowance for actual monthly expenses. If the individual exceeds the median income and has too much money left over after accounting for living expenses, he or she will usually not qualify for chapter 7 bankruptcy.



RELATED TERMS
  1. American Bankruptcy Institute - ...

    A non-partisan research organization that educates its members, ...
  2. Bankruptcy Trustee

    A person appointed by the United States Trustee, an officer of ...
  3. Bankruptcy

    A legal proceeding involving a person or business that is unable ...
  4. Chapter 11

    Named after the U.S. bankruptcy code 11, Chapter 11 is a form ...
  5. Chapter 7

    A bankruptcy proceeding in which a company stops all operations ...
  6. Bankruptcy Risk

    The possibility that a company will be unable to meet its debt ...
Related Articles
  1. Will filing bankruptcy stop an eviction?
    Credit & Loans

    Will filing bankruptcy stop an eviction?

  2. Bankruptcy Protection For Your Accounts
    Retirement

    Bankruptcy Protection For Your Accounts

  3. Prevent Bankruptcy With These Tips
    Credit & Loans

    Prevent Bankruptcy With These Tips

  4. Declaring Bankruptcy Is No Easy Out ...
    Insurance

    Declaring Bankruptcy Is No Easy Out ...

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center