BAPCPA Tax Law Leaves More in Debt

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In 2005, the government implemented a law called the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) in an effort to curb the abuse of filing for bankruptcy simply to cancel out debts without serious efforts to repay them. The BAPCPA and other reform measures made bankruptcy requirements more stringent and effectively ruled out filing for Chapter 7 liquidation bankruptcy for most people. One of the measures put in force was the means test in which an income limit for each state was set over which you could not qualify for Chapter 7 bankruptcy and must apply for Chapter 13 reorganization bankruptcy instead (for individual filers).

Hence, the clear objective of the BAPCPA was to curtail bankruptcy abuse and reduce the number of bankruptcies by making it such that only those in genuine need of bankruptcy need apply.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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