In the first full year the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was in effect, bankruptcy filings fell 70% to 617,660, the lowest number since 1988.
Filings involving business debts totaled 19,695, down 50% from almost 40,000 in 2005, while non-business filings dropped 71%, from more than 2 million in 2005 to 597,965.
BAPCPA established a needs-based formula that determines whether debtors are eligible to file under Chapter 7 (where all unsecured debts are generally discharged) or should be converted to Chapter 13 (where at least a portion of debts are paid). The test resulted in a 78% decline in Chapter 7 filings.
Other consumer and commercial bankruptcy provisions of the act are available at the AICPA’s Personal Financial Planning Center at http://pfp.aicpa.org.
Source: www.uscourts.gov.