Bankruptcy Laws Protect Creditors and Debtors According to the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA)

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Credit and Debt as Protected By Bankruptcy Laws – Major Intents of the Statutory and Judicial Elements

Credit and debt are related. You create debt by use of credit. When you do not manage your debt well using credit, you open the door to other players.

Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) was passed by Congress and signed into law by President Bush in April 2005. It tightened eligibility requirements and made it difficult to file for liquidation under Chapter 7 bankruptcy.

An emphasis on consumer education is among its more ambitious reforms to bankruptcy. Changes instituted by this new law took effect on October 17, 2005. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 amended the U.S. Bankruptcy Code.
thextraordinarionly bankruptcy laws photo, Credit and Debt blog post by Hazlo Emma

Bankruptcy  Law Protection

Did you know that bankruptcy laws protect both the creditor and the debtor?

According to Pittaluga (2000), the bankruptcy law protects borrowers by permitting brief reprieve from the actions of its creditors, whether the debtor is an individual, cooperation or partnership.

The major intent of the law is protecting the best interests of creditors (e.g. returning property rights to them, dispersing monies recovered from the sale of a debtor’s possessions upon default) and debtors (e.g. compensating them for services not received and/or damages).

thextraordinarionly calculate how much you owe, debt, bankruptcy photo, Credit and Debt blog post by Hazlo Emma

As demonstrated in Section 362a of the law where the automatic stay or injunction acts of or by creditors are in force, the creditor is allowed to act in several ways.

Read further here:  Automatic stay

Creditors may either commence or continue with judicial or administrative proceedings against the debtor, or enforce a judgment contained.  They can obtain possession of control of debtors’ property or create, perfect and enforce a lien against debtor’s property.

Consumer Protection Laws

Consumer protection laws such as the Fair Debt Collection Practices Act and the Truth in Lending Act are overseen by Federal agencies. The Federal Trade Commission (FTC),  makes consumer protection law its primary mission and tries to make sure competitive balance is preserved in matters of national commerce.

thextraordinarionly bankruptcy effects pic shot, Credit and Debt blog post by Hazlo Emma

The Creditors Hand

Alternatively, creditors can collect or recover a claim against the debtor; set off any debt owing to a debtor; criminal proceedings against the debtor; and commence or continue an action for the collection of alimony, maintenance, or support.

A condition that allows modification, termination or annulment of the automatic stay provision is for the bankruptcy petitions filed in bad faith.

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The Law on Credit and Debt

Despite the fact that honest debtors that reside in or with domiciled places of business, or property in the United States, file for bankruptcy primarily for discharge, some do not get it.  The reasons include removing, destroying or concealing property within years of filling; those who lack sufficient explanation of loss or deficiency of assets; failure to comply with Bankruptcy Court orders; et cetera (Pittaluga, (2000).

Therefore, the law protects both the creditors and debtors.

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Pittaluga, R. Jr., Senterfitt, A., Eidson, P. A. (2000) U.S. Bankruptcy/Insolvency Laws and Foreign Proceedings. Am Montand, den 30. Oktober 2000 fand statt.

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By Hazlo Emma

Hazlo Emma is a Business Development, Digital Strategist & optimistic personal Coach in the Financial, Writing, and Social Media Space for Startups and Small Businesses.  She has a knack for numbers with an advisory role to a tech-averse clientele. Emma is an inspiration to solopreneurs, newbies, founders, CEOs, and B2B enthusiasts, challenging each one to impact their world, a step at a time with innovative strategies. Her mantra is creating lasting memorable experiences consistently, with the delivery of excellent and faster results (offline and online) for higher returns on investment, whilst exceeding the expectations of prospects.   Currently pursuing further studies in the security niche, she is a team member at where they test affordable DIY innovative business tips, social media marketing tips, tweaks, hacks, strategies, … that improve engagement, branding, and share their experiences. Formatting, proofreading, copy editing, line editing, comprehensive and substantive editing manuscripts comes second nature to her. even ghost writing in the nonfiction genre as a side hustle. Hazlo Emma follows real-time trends in Small Business, Startup World, Social Media, Social Impact Matters, Leadership, Fin-tech, Big Data, Analytics, Robotics, IoT, Artificial and Hybrid Intelligence, in addition to frequently answering questions on Quora! She is a Global Juror of the 5th Global Entreps Awards & 5Gcitizens International Congress nominating exceptional and outstanding individuals under the guidance of the United Nations’ SDGs (Sustainable Development Goals). Hazlo Emma is a co-author of Crawl Outta Debt Now.


  1. Great article indeed Hazlo, brand new information for me, I was thinking that the law protect the debtors only, but this rise a question of,

    If I used my credit from here in Egypt and the debtor are in the States and there is an issue can I be protected by this act as foreigner?

    Another question in regards to the act

    Is the court which deal with both cases is the same or different?

    Many thanks for your support and making me learn something new every time I read one of your articles.

    1. Adel,
      Your engaging questions lead us to get responses correct the first time.
      You need to further research on the protection laws and existing acts of the land that govern the exact scenario that you have pointed out here.
      These could be revised depending on current economic times. For example, a business can declare bankruptcy and start afresh. But for student loans, yoit is nearly impossible to get a bankruptcy deal. Its all a different ball game.
      A creditor and a debtor create a relationship around money, debt, and credit. They are both protected.
      We are elated to know that you find helpful information from ThExtraordinariOnly blogs.

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