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4-20-2013 A SECOND WAVE OF BANKRUPTCY FILINGS MAY START AS EARLY AS TODAY
A SECOND WAVE OF BANKRUPTCY FILINGS
MAY START AS EARLY AS TODAY
by Leslie Keith Kaufman
is fairly commonly known from extensive coverage in the main-
stream media that the Bankruptcy Abuse Prevention
Protection Act of 2005 (BAPCPA), which was signed by President Bush
eight years ago today,
on April 20, 2005 . This new law took
effect 6 months later, on October 17, 2005.
2005 saw a record
number of approximately 2 million bankruptcies
filed by debtors seeking bankruptcy protection under the old law
advance of the new law taking effect.
The purpose of BAPCPA was to prevent perceived abuses of then-
existing bankruptcy law, in which some legislators perceived that
filing a Bankruptcy Petition under Chapter
7 of the old law was
"too easy". These efforts to make filing bankruptcy more difficult
in a huge increase in bankruptcy filings that year.
Approximately 2 million bankruptcies were filed in 2005.
Among other eligibility requirements, Debtors who filed cases after
October 17, 2005 were required to obtain
a certificate of
completion of a credit counseling course, and also pass a Means
Test in order to file
a Chapter 7 Petition.
Bankruptcy cases filed after October 17, 2005 were also accompanied
filing fees, and, due to the more complicated Petition
and Schedules, higher attorney's fees, as well as navigate
changes to the Bankruptcy Code.
One of these changes to bankruptcy is about to have an effect
Under the old law, a debtor would be eligible to file a Chapter 7
case if they had not filed a
previous case within the six years
prior. Under the new law this filing restraint was increased to
those approximately 2 million bankruptcies which were filed in
2005 to beat the operative date of the new law,
have been barred
from filing another Chapter 7 for eight years since their last
This eight year waiting
period included the crash of 2008, and the
ensuing worst economic recession in the United States since the
All those debtors who filed a Chapter 7 case to beat the new
bankruptcy law in 2005,
have been precluded by that same new law
from filing again, even though they may have suffered great losses
to their investments, businesses, or jobs in the last five years of
eight year waiting period is about to come to an end for many
who filed in advance of the new law taking effect.
Although bankruptcy filing statistics have shown a recent decrease
in the number of filings (since 2011),
those who have been
prevented by the Bankruptcy Abuse Prevention and Consumer
Protection Act of 2005
from filing another bankruptcy will soon get
their chance at another fresh start.
While most of the
surge in cases in 2005 occurred toward the end of
summer that year, as consumers hastened to beat the implementation
of the new law, the eight year prohibition period for these cases
is coming to a close by no later than
October 14, 2013 (As October
17, 2005 was a Monday, the latest date that a case could be filed
the old law was October 14, 2005).
I expect that many of those who rushed to beat the old law, who
been effected by the recession over the last five years but
were barred from filing for protection under the new
law, will soon be seeking this protection as soon as they again
become eligible through the
summer and fall of 2013.
Les Kaufman of The Law Offices of Kaufman & Kaufman has been
debtors file for bankurptcy protection since 1983