Number: RS22511
Title: Preliminary Observations on the Impact of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (P.L. 109-8)
Authors: Brian W. Cashell and Mark Jickling, Economics Division; Heather D. Negley, Information Research Specialist 
Abstract: The Bankruptcy Abuse Prevention and Consumer Protection Act, signed into law on April 20, 2005, was intended to prevent the filing of abusive bankruptcy petitions and to require debtors with regular incomes to repay as much of what they owed as possible. Overall, the perceived effect of these amendments was to make the bankruptcy code significantly more favorable to creditors. As a result, there was a "rush to the courthouse" between the date of enactment and the effective date, October 17, 2005. During that period, record numbers of consumer bankruptcy petitions were filed. During 2006, by contrast, the number of filings dropped sharply, to less than a quarter of the 2005 figure. No doubt much of the decline is explained by what happened during the transition - many consumer bankruptcies filed in 2005 were accelerated by the enactment of the new law and would otherwise have been filed in 2006 or later. At the same time, part of the slowdown may be permanent, if the new law is having its intended effect of discouraging certain types of filings. With only six quarters of data under the new law, the lasting impact is uncertain. This report examines the evidence to date, and offers some preliminary observations on the numbers and types of bankruptcy petitions filed.
Pages: 6
Date: September 14, 2007