The passage of the Bankruptcy Abuse Prevention and Consumer Protection Act, Pub. L. No. 109-08, 199 Stat. 23 (2005) (BAPCPA), resulted in significant changes in the bankruptcy landscape, particularly regarding the ability of individuals to obtain bankruptcy relief. Prior to the passage of BAPCPA, virtually all bankruptcy cases filed by individuals were filed under either Chapter 7 of the United States Bankruptcy Code, which provides for a liquidation of nonexempt assets, or Chapter 13, by which a portion of the debt is paid over time under a court-approved plan. BAPCPA enacted the “means test” into law, which essentially precludes individuals with certain levels of income and expenses from obtaining bankruptcy relief under Chapter 7 of the code. This limitation, coupled with the statutory debt ceilings that BAPCPA made applicable to Chapter 13 cases, left some individuals with no ability to obtain bankruptcy relief other than under Chapter 11.
Pre-BAPCPA, Chapter 11 cases filed by individuals were relatively rare and frequently filed by debtors with businesses and/or substantial assets. Since passage of BAPCPA, the number of individuals filing for Chapter 11 has rapidly increased. In 2005, there were 861 nonbusiness Chapter 11 filings nationwide, whereas by 2012 that number had risen to 1,527. These numbers do not include filings by individuals whose business debts “predominate.”
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