In April 2005, Congress passed the Bankruptcy Reform Act (officially known as The Bankruptcy Abuse Prevention and Consumer Protection Act, or "BAPCPA"). It became effective for cases filed after October 17, 2005.
The main purpose of the new Act was to make it more difficult to file for Chapter 7 (liquidation) relief by forcing higher income debtors to file a Chapter 13 (reorganization) petition instead. Typically in a Chapter 7 case, you do not have to pay back any of your unsecured debts. In a Chapter 13, however, you enter into a 5-year plan to repay some or all of your unsecured debt. During the months leading up to the changes that the new Act would bring, hundreds of thousands of consumers filed personal bankruptcies to avoid those changes.
We are now approaching the eighth anniversary of those 2005 filings. Under the new Act, the time between Chapter 7 discharges was increased from 6 years to 8 years. If you had filed a Chapter 7 bankruptcy petition in September 2005, this September you could again file and receive another discharge.
In the years following 2005, the number of annual Chapter 7 bankruptcy filings fell. It was not until 2010, at or near the very bottom of the Great Recession, that the number of annual Chapter 7 bankruptcy filings met or exceeded the number of filings in the years leading up to the new Act.
Many practitioners are expecting that some of the 2005 debtors will be looking to file again as soon as they are able to obtain another Chapter 7 discharge.
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