Cite as: Keith M. Lundin, Lundin On Chapter 13, § 3.9, at ¶ ____, LundinOnChapter13.com (last visited __________).
Most of the fundamental debtor protections in bankruptcy law before the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)1 were self-starting and were lost only upon some action by a creditor. For example, the automatic stay was truly automatic—effective everywhere with respect to everyone without a motion from the debtor or court order.2 Relief from the stay before BAPCPA required a motion, hearing and order.3 If a debtor misbehaved in a Chapter 13 case before BAPCPA, a party in interest made a motion to dismiss, the court held a hearing and if the evidence was there, a dismissal order ended the case.4
BAPCPA is different. Consumer debtors have to pay their lawyers to ask for relief that used to be automatic and bad things happen to debtors in bankruptcy cases unless debtors act to stop them. Debtors with prior bankruptcy experience have no stay unless they ask for it5 or have a 30-day stay that they must act to extend.6 There are “automatic” dismissals when certain things happen or don’t happen in consumer bankruptcy cases after BAPCPA.7
In many ways BAPCPA both shifted the burden of proof to debtors and guaranteed that the cost to debtors of a bankruptcy case would go up. And increased cost is exactly what happened. As documented by the The Consumer Bankruptcy Fee Study: Final Report,8 the administrative cost of consumer bankruptcy cases rose dramatically after BAPCPA—on average by an inflation-adjusted $667 per Chapter 13 case.9 Consumer debtors in the post-BAPCPA world have to ask for relief more often and have to pay their lawyers to get what used to be theirs without asking. There is no evidence that creditors—or anyone for that matter—are better off for this effect of BAPCPA.10
1 Pub. L. No. 109-8, 119 Stat. 23 (2005).
2 See § 58.1 Usual Protections.
3 See § 63.1 Strategic Considerations, § 63.2 Timing, Procedure and Form, § 64.1 Lack of Adequate Protection, § 64.2 Other Cause for Relief, § 64.3 Prospective, In Rem and Automatic Relief from Stay, § 64.4 Annulment of the Stay and § 64.5 Application of § 362(d)(2) in Chapter 13 Cases.
5 See 11 U.S.C. § 362(c)(4), discussed in § 61.1 When Does § 362(c)(4) Apply?.
6 See 11 U.S.C. § 362(c)(3), discussed in § 60.1 When Does § 362(c)(3) Apply?.
7 See 11 U.S.C. § 521(i), discussed in § 42.2 Consequences of Failure to File Required Information, Including “Automatic Dismissal”.
8 Lois R. Lupica, The Consumer Bankruptcy Fee Study: Final Report, 20 Am. Bankr. Inst. L. Rev. 17 (2012) [hereinafter Lupica, Fee Study].
9 Lupica, Fee Study, at 89.
10 Quite the contrary, the data show that all creditors—priority, secured and unsecured—are doing worse under BAPCPA than under prior law. 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.