The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) may now play an important role in the 2016 presidential race. Vice President Joe Biden, then Senator Biden, championed the bill. Now, he is trying to win support for his potential presidential bid from some of his biggest critics, mainly Senator Elizabeth Warren.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 lengthened the time a bankruptcy debtor has to wait between Chapter 7 filings. The BAPCPA also created the requirement for means testing. Under this requirement, a bankruptcy attorney must draft a statement of current monthly income based off the last six months for the bankruptcy filer. The bankruptcy attorney then subtracts out standard IRS deductions based on local average spending habits and certain expenses particular to the bankruptcy filer. Regarding the local standards, the bankruptcy attorney uses Michigan standards and Oakland County standards specifically for a filer from Oakland County Michigan. The test tells the bankruptcy attorney whether or not the filer has money left over to repay his/her unsecured creditors.
The Bankruptcy Abuse Prevention and Consumer Protection Act also created a presumption of abuse. In the event the Means Test shows that the bankruptcy filer does have a significant amount of money to pay his/her creditors, the bankruptcy attorney will have to notify the court that there is a presumption of abuse. This presumption of abuse, however, can be rebutted (disputed).
The Bankruptcy Abuse Prevention and Consumer Protection Act also created a requirement for credit counseling and personal financial management. These are counseling courses that the bankruptcy filer must take by his/herself without assistance of the bankruptcy attorney. They are meant to help the bankruptcy filer with budgeting and credit management. Without the certificates of completion for the credit counseling, the bankruptcy attorney cannot file the case. If the bankruptcy filer does not complete the personal financial management after filing, the case can be closed without a bankruptcy discharge.
The final big addition to the bankruptcy code from the Bankruptcy Abuse Prevention and Consumer Protection Act was to add restrictions to bankruptcy automatic stay protections for cases repeat bankruptcy filers. In these cases, the bankruptcy attorney will need to petition the court to extend the automatic stay, or in some cases impose it.
As Vice President Joe Biden reportedly mulls a bid for the U.S. presidency, his champions portray him as a credible alternative to Democratic Party front-runner Hillary Clinton, who faces accusations that she is beholden to the financial industry.
But, a Biden campaign risks confronting the scorn of one of the party’s most influential progressives: Sen. Elizabeth Warren. Though he has reportedly sought her favor, Warren has historically disdained, charging him with acting as a tool of the credit-card industry by limiting debt relief for people grappling with financial troubles.
As a Harvard law professor in 2002, she published a journal article excoriating him for playing a leading role in delivering legislation that made it more difficult for Americans to reduce debts through bankruptcy filings. As the senator from Delaware, Biden’s repeated push for the bill — signed into law by President George W. Bush in 2005 — amounted to “vigorous support of legislation that hurts women,” Warren declared. She said “the group that will be most affected by the changes in the bankruptcy legislation Senator Biden so forcefully supports will be women, particularly women heads of household who are supporting children.”
In a separate 2003 book she co-authored with her daughter, Warren said, “Senators like Joe Biden should not be allowed to sell out women in the morning and be heralded as their friend in the evening.”