What major change did the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 introduce?

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 introduced several significant reforms to the bankruptcy process, one of which is the requirement for mandatory pre-filing credit counseling. This mandate is designed to ensure that individuals seeking to file for bankruptcy first receive financial education and explore alternatives to bankruptcy, thus promoting informed decision-making.

This counseling requirement serves a dual purpose: it aims to reduce frivolous bankruptcy filings and encourages filers to consider other financial options. By requiring individuals to participate in credit counseling sessions before they can officially file for bankruptcy, the law seeks to address issues of abuse within the bankruptcy system and provide consumers with the tools to manage their financial situations more effectively.

Other options presented reflect misunderstandings of the Act's provisions. It did not eliminate all types of bankruptcy, nor did it prohibit the discharge of all debts. Additionally, it did not provide unlimited access to bankruptcy filings, as the law introduced stricter eligibility criteria and processes for filing. Therefore, the introduction of mandatory pre-filing credit counseling is a significant and distinguishing feature of the 2005 Act.