Bankruptcy Business as Usual Despite BAPCPA Speed Bump

Surprisingly little has really changed in the bankruptcy world with the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.  A complicated new law is actually fun for lawyers; a venture into the unknown, an academic exercise and an opportunity to create new theories or remedies for a client.  Now, as we finish the second full year under the new law, it is clear that bankruptcy protection continues to be available for most people who need it.  As the courts unravel this tangled and incompetently written piece of legislation we lawyers find that our worst fears are not being realized.  Most of our clients can find relief from oppressive debt collectors and some are still able to save their homes from foreclosure.

I suppose the biggest problem with the new law is the “means test”.  The time and effort required to gather and tabulate six months worth of “pay advices” is the biggest waste of time in the entire process.  It costs the client money, at times delays the bankruptcy filing and annoys the heck out of my staff.  Fortunately, here in Oregon, we have a general order requiring that we send the paperwork to the US Trustee or the Chapter 13 Trustee and not submit it for filing with the court.

Tax return disclosure to third parties, my biggest initial peeve, has proved to be a non-issue.  Confidentiality requirements imposed by the court for protection of the information, the ability to redact the social security numbers and children’s names, and the narrow time frame allowed to a requesting creditor mean the option is seldom exercised and is not open to abuse.

It is annoying to waste the limited financial resources of my clients on useless credit counseling.  Telling clients they have to take a financial management course is mildly insulting. So far, none of my clients seem to have received bad advice;  only real harm is done to the client’s pocketbook.

The meaningless disclosure requirement wastes paper and kills trees.  My clients laugh when I tell them I am required to give them congressionally mandated disclosure documents but they are not required to read them.  Most end up in recycling, unread.

The vanishing or non-existent “automatic stay” occasioned by a prior bankruptcy case dismissal or two within one year can be an annoyance but is only a problem when an aggressive creditor takes that as an opportunity to try and block bankruptcy protection.  We do pretty careful research on the client background and can anticipate the need for an immediate hearing when required.

As we watch the courts interpret this mess, it is easy to see that the lawyers and judges working with the law are a great deal smarter than the lobbyists who paid for it and legislators who traded their votes for campaign contributions from credit card banks and credit unions hoping to increase their already obscene profits.