The Presumption Of Fraud Under Bapcpa

The Presumption of Fraud under BAPCPA

Most agree that every effort should be made to curtail abuses of the bankruptcy system. Some, however, argue that the last major change to the Bankruptcy Code went too far.  The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) has been widely regarded as one of the greatest successes of the banking industry.  Among the major amendments to the Bankruptcy Code under the BAPCPA were the provisions concerning the presumption of abuse by debtors — provisions widely criticized by public interest groups as further exacerbating the problems of the financially distressed.

Following are highlights of some of the changes under the BAPCPA:

  • Limitations to Chapter 7 filings. The consumer credit industry lobbied for a long time for laws that would restrict the number of people eligible for filing under Chapter 7 (liquidation). It succeeded with Section 707(b), which direct the courts to dismiss Chapter 7 filers or re-direct them to Chapter 13 if it determines — under a more stringent means test than before — that the debtor is able to make payments. There is a presumption of abuse for those who fail the means test.
  • Purchase of Luxury Goods. It is understandable that certain debts should not be dischargeable in bankruptcy, particularly purchases for so-called luxury items.  Under the previous law, a luxury item was considered any purchase of $1,225 or more. This was changed under Section 523(a)(2)(C)(I) to a mere $600 under the BAPCPA.  Furthermore, the time period for the restriction on these purchases was increased to 90 days before filing. What this means is that if you purchase even a single item worth $600 or more within three months of filing for bankruptcy, that purchase will be presumed to be fraudulent and potentially non-dischargeableif the creditor objects.
  • Cash Advances. Before 2005, you could make a cash advance on your credit card in an amount less than $1,225 more than 60 days before filing, and have the amount discharged in bankruptcy.  Under Section 523(a)(2)(C)(II), that amount is now reduced to $875, and the time period has been increased to 90 days. We find that most of the people we meet are not trying to do anything fraudulent or abusive.  However, people can inadvertently fall into traps where the law presumes fraud.

Our attorneys are recognized experts in this area and can assist you with all aspects of your bankruptcy, including how to avoid committing an inadvertent act of fraud under the current law. Call us today for a consultation.

Categories

Reviews

From Our Clients
  • “We had great experiences with Mr. Roy. And all the folks here. Kevin and Chris and all the people were very kind and thorough in looking after our situation many years ago.”

    - Kathryn D.
  • “My wife Jane and I were experiencing a very difficult financial situation. Debts, foreclosure, repossession's to name a few. We were referred to Lansing Roy and it was one of the best decisions we ...”

    - Douglas P.
  • “Smartest man on the block!!! A wonderful firm!!! An excellent choice!!! Expand, expand, expand”

    - Brenda B.
  • “Filing for bankruptcy is, obviously, not a pleasant experience. The process, from making the decision, through the final disposition, is emotional and stressful. Our situation was complicated and took ...”

    - Kerry M.
  • “All around great to work with!! This firm is excellent!! I was referred by a family friend and I could not believe the level of service.”

    - Satisfied Client
/

How We're Different

  • Free In-Office Bankruptcy Workshop
  • Well-Versed in Bankruptcy Law
  • Solid Reputation in the Industry
  • Caring & Personable Service
  • Non-judgmental Approach to Each Case

Contact Us

Fill out this form to request a free consultation.
  • Please enter your first name.
  • Please enter your last name.
  • Please enter your phone number.
    This isn't a valid phone number.
  • Please enter your email address.
    This isn't a valid email address.
  • Please make a selection.
  • Please enter a message.