Cite as: Keith M. Lundin, Lundin On Chapter 13, § 3.11, at ¶ ____, LundinOnChapter13.com (last visited __________).
In 1978, Congress scrapped the former Bankruptcy Act and enacted a whole new Code. In contrast, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)1 rides in a sidecar to the preexisting Code. Almost all of the old Code still applies to some or all debtors. The rules and tests that the credit community told Congress gave bankruptcy judges too much discretion and allowed too many “can pay” debtors to escape without paying still apply to some, even many debtors.
For example, after BAPCPA, with respect to Chapter 13 debtors with “current monthly income”2 less than applicable median family income, bankruptcy judges still review for reasonableness and necessity debtor choices about how much to spend for a car, a house or a waterbed.3 Pre-BAPCPA decisions interpreting disposable income in § 1325(b) remain relevant to some bankruptcy cases.4 Poorer debtors remain subject to the old law; richer debtors have new tests that let them decide how much to spend on a car or a house.5 This is the new world of BAPCPA.
Don’t throw away those seminar materials and previous editions. The pre-BAPCPA cases interpreting key concepts in consumer bankruptcy practice remain vital for the most part. There will be parallel concepts, cases and secondary interpretations as BAPCPA is implemented and unraveled by the courts.
1 Pub. L. No. 109-8, 119 Stat. 23 (2005).
3 See 11 U.S.C. § 1325(b)(1) and (2), discussed in § 93.1 Section 1325(b)(2)(A) and (B): “Amounts Reasonably Necessary to Be Expended—” When CMI Is Less Than Median Family Income.
4 See § 91.1 In General, § 91.2 Projected (Disposable) Income, § 91.3 Reasonably Necessary for Maintenance or Support, § 91.4 Debtor or Dependent, § 91.5 Counting the Three-Year Period, § 91.6 Debtor Engaged in Business and § 91.7 Payment-in-Full Option.
5 See 11 U.S.C. § 1325(b)(3), discussed in § 96.1 Average Monthly Payments on Account of Secured Debts.