§ 3.6     Five: Make the Door Smaller
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 3.6, at ¶ ____, LundinOnChapter13.com (last visited __________).

For consumer debtors, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)1 reduces access to bankruptcy relief by making bankruptcy more costly, more complicated, less efficient and more scary. Add up all of the new documents,2 the new certificates,3 the new deadlines,4 the new hearings,5 the new exceptions to discharge,6 the new limitations on exemptions,7 the new obstacles to Chapter 7 entry8 and to Chapter 13 confirmation9—BAPCPA is revealed for its true colors: a lending industry plan to delay and frustrate bankruptcy filings by borrowers who can’t pay.


As explained by Ed Flynn, a prominent bankruptcy scholar and researcher writing in 2013, BAPCPA “led to a permanent drop in filings somewhere in the 30 percent range, and . . . since 2005, cumulative filings have been about 5 million below the number that would have filed absent the legislation.”10 Flynn offers five reasons that BAPCPA is the probable cause of the drop in bankruptcy filings after 2005:

1.Cost to File: It is now more expensive to file, and this has been well documented by both the General Accounting Office2 and Prof. Lois Lupica (University of Maine School of Law; Portland, Maine).3
2.Credit Counseling: A portion of potential debtors do not file after undergoing mandatory credit counseling. No definitive figures exist on this, but several early estimates of the percentage of debtors who obtain a certificate but do not file are in the 10 to 15 percent range.4
3.Tax Returns: Debtors are now required to provide past tax returns, which might present an impediment for some potential filers. Some have not filed their returns at all, and others might be worried that information on their returns will be inconsistent with the information that would be on their bankruptcy petitions. . . .
4.Public Perception: There was a huge amount of press coverage of BAPCPA leading up to its effective date. A lingering effect of this is that there may be a sizeable number of people who do not think they are eligible for bankruptcy. Eight years later, many bankruptcy attorney websites still have a Q & A section designed to dispel this perception.
5.The “Thousand Paper Cuts”:6 BAPCPA contains many other provisions that make filing either more difficult or less beneficial to the debtor (e.g., additional filing requirements, limitations on repeat filings, potential attorney liability, potential to be audited, homestead equity limitations, etc.). Although the impact on filings from any of these factors might be small, as a group they certainly could have led to fewer filings.11


2 See U.S. Gov’t Accountability Office, GAO-08-697, Bankruptcy Costs Associated with the Bankruptcy Abuse Prevention Act of 2005 (2008), available at www.gao.gov/assets/280/277572.pdf.

3 See Lois R. Lupica, The Consumer Bankruptcy Fee Study: Final Report (Dec. 1, 2011), available at www.abiworld.org/Fee_Study/CFSFinalReport_Final_Dec7.pdf.

4 For example, see National Bankruptcy Research Center and Money Management International Financial Education Foundation Announce Result of Credit Counseling Value Study (May 11, 2009), available at https://www.nbkrc.com/CreditCounseling_News.aspx, and U.S. Trustee Program: Oversight Hearing Before the Comm. on the Judiciary, Subcomm. on Commercial and Administrative Law (Oct. 2, 2007) (statement of Clifford J. White, III, director, Executive Office for U.S. Trustees), available at www.justice.gov/ust/eo/public_affairs/testimony/docs/testimony071002.pdf.

6 This description of the changes to the bankruptcy laws predates BAPCPA by at least five years. See Donald D. Barlett and James B. Steele, “Soaked by Congress,” Time, May 7, 2000, available at http://content.time.com/time/magazine/article/0,9171,44550,00.html.




Why did the 109th Congress make the door to the bankruptcy court smaller? If potential debtors are dissuaded from filing bankruptcy, where will they go? Are these the less-needy debtors who will pay their creditors rather than file bankruptcy? Nobody believes that. We will wait a long time for empirical evidence that making bankruptcy more costly and more complicated is good for somebody. The facts are already in: BAPCPA has made losers of all players in bankruptcy—debtors, creditors and the public.12


Don’t think for a minute that bankruptcy professionals are happy about this situation. Though they stand to be the only beneficiaries of greater cost and complication, this is purposeless complication and inefficiency that is not rewarding.13 Getting paid to gather paycheck stubs or to certify worthless sticks of furniture has no utility for anyone in bankruptcy cases.


1  Pub. L. No. 109-8, 119 Stat. 23 (2005).


2  See Part 3.


3  See, e.g., § 19.3  Certificate from NBCCA: 11 U.S.C. § 521(b), § 36.33  Certificate of § 342(b) Notice after BAPCPA, § 36.35  Certification About Eviction Judgment and Rent Deposit and § 156.4  Domestic Support Obligation Certification.


4  See, e.g., § 19.2  Timing of Briefing and § 42.5  Tax Return Duties Seven Days before First Scheduled Meeting of Creditors.


5  See, e.g., § 60.3  Timing, Procedure and Form for Extension of Stay.


6  See § 159.1  Taxes, § 159.2  False Representations and Fraud: § 523(a)(2), § 159.3  Fraud and Defalcation: § 523(a)(4), § 159.4  Unscheduled Creditors: § 523(a)(3), § 159.5  Domestic Support Obligations: § 523(a)(5), § 159.6  Student Loans: § 523(a)(8), § 159.7  Willful or Malicious Injury: § 1328(a)(4), § 159.8  Boating or Flying while Intoxicated: § 523(a)(9) and § 159.9  Chapter 7 Trustee Compensation: § 1326(d).


7  See § 48.3  Exemptions and Exemption Limitations Added by BAPCPA.


8  See § 8.6  11 U.S.C. § 707(b) Problems Are Likely.


9  See Part 5.


10  Ed Flynn, BAPCPA: The Mystery of the 5 Million Missing Cases, 33 Am. Bankr. Inst. J. 32, 81 (2014) [hereinafter Flynn, The Mystery of the 5 Million Missing Cases].


11  Flynn, The Mystery of the 5 Million Missing Cases, at 32–33 (internal n.5 omitted).


12  See Lois R. Lupica, Am. Bankr. Inst., The Consumer Bankruptcy Creditor Distribution Study Final Report (2013), discussed in § 3.2  One: Those Who Can Pay Should Pay and § 3.8  Seven: Unsecured Creditors Don’t Count.


13  See § 3.5  Four: Don’t Trust Lawyers.