Bankruptcy laws were passed after realising the need to have an effective system by which an honest debtor, who wasn’t able to pay the staggering debts he owed to his creditors, could get an opportunity to begin his life afresh with dignity and self-respect. This also proved beneficial to the society as a whole.
After being first passed in 1898, the U.S Bankruptcy Law was revised many times; mainly in the year 1933, 1934, 1938 and 1978. While other laws are important too, noteworthy amongst them is The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) which was passed in year 2005, after a lot of debate and resistance. The new regulations in BAPCPA are complex and favour the credit industry.
BAPCPA made extensive changes in the system by making bankruptcy filing expensive for individuals and businesses and cutting down on the benefits previously offered.
Bankruptcy filing, discharging debts and repeat filing for bankruptcy became difficult by BAPCPA. On the other hand, fees for filing and the requisite paperwork increased.
The intention of BAPCPA was to offer lower interest rates to banks and credit card companies and they in return would lower their fees and interest rates, benefiting them and their consumers. Sadly, that hasn’t happened.