Filing a Consumer Bankruptcy Case Under BAPCPA is More Expensive

Prior to the passage of BAPCPA, debtors who could "afford" to make some reasonable payment toward their consumer debt were challenged bypaperwork.jpg the U.S. Trustee's office under the "bad faith" provisions of Section 707b of the bankruptcy code.  This was really the only test available to the government to challenge a chapter 7 filing based on income level.  It seemed to work very well in terms of keeping those who could afford to pay a reasonable amount to their creditors out of chapter 7s and in chapter 13s.

Most debtors would gather their average monthly expenses and calculate what they believed would be their average income.  If it appeared that they had enough to make a "reasonable" dent in their unsecured debt over a 3 year period, they would typically file a chapter 13 bankruptcy instead of a chapter 7 to make a good faith effort to pay some of the debt and to avoid this 707b challenge.

Now, under BAPCPA, the debtor must go through the process of completing a complicated means test, Despite this, they appear to be governed by the bad faith test of 707b as well. 

The problem you ask?  A realistic picture of what a debtor earns and is going to earn is not necessarily found as a result of this extra level of testing.  Also,  it causes a myriad of additional paperwork, attorney liability issues and complications.  Attorneys have raised their fees as a result, and the honest debtor is forced to move through a very grey and more expensive system to achieve the same result.

I'm not the only one complaining.  A short article written by a member of the "Bankruptcy Network" which I read almost daily lays out the 10 biggest time wasters as a result of BAPCPA.  See it here.