Legislation

• On April 20, 2005, then-President George W. Bush signed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (The Act), making it law in the United States. The Act made it more difficult for debtors to file for Chapter 7 liquidation bankruptcy. Chapter 7 liquidation basically sells qualified assets of the debtor and pays off creditors to the extent funds are available. Most, but not all, debt leftover gets discharged by the bankruptcy court. The Act created income requirements for debtors attempting to use Chapter 7. If debtors fail the income requirements, they must use Chapter 13 bankruptcy, which creates a payment plan and restructures some debt.
  
  

Members

• The Consumer Bankruptcy Project had six members. The members included five law school professors and one sociologist. The members were Robert M. Lawless of the University of Illinois College of Law; Angela K. Littwin of the University of Texas School of Law; Katherine M. Porter of both the University of Iowa School of Law and Harvard University; John Pottow of the University of Michigan School of Law; Deborah Thorne (the sole sociologist) of Ohio University; and Elizabeth Warren of Harvard University.
  
  

Publication

• The main report was titled "Did Bankruptcy Reform Fail? An Empirical Study of Consumer Debtors." The report analyzed a random sample of petitioners in bankruptcy court who filed after Congress enacted legislation making it more difficult to qualify for bankruptcy. The report was published in the "American Bankruptcy Law Journal" in Volume 82 in 2008 as well as several other law journals at Harvard, Michigan, Texas, Illinois and Iowa.
  
  

Findings

• The report noted that Congress enacted the legislation with the purpose of weeding out the so-called "can pay" bankruptcy filers. Proponents of the legislation argued that many high-income companies, individuals and families took advantage of bankruptcy courts to have debts discharged despite their ability to pay for them. The report found that post-legislation bankruptcy filers appeared to represent typical American families suffering from financial distress.
  
  

Conclusion

• The study argued that the legislation, in fact, was "not aimed at high-income abusers but was instead a general assault on all debtors." Secondly, the report argued that debtors simply incur more debt prior to filing for bankruptcy, regardless of income level. Accordingly, most bankruptcy debtors (before and after the legislation) were ordinary American families whose primary reason for filing was based on the amount of debt accrued rather than their income level.