The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) amended the U.S. Bankruptcy Code in 2005 as part of a widespread overhaul of the system. The BAPCPA put into place new eligibility requirements for obtaining Chapter 7 bankruptcy protection. The provisions make it tough for individuals who have acquired mainly consumer debts, but who earn an above-average income for a household in Minnesota of similar size. The formula for determining Chapter 7 eligibility is called the means test.
For struggling small business owners, the distinction between personal bankruptcy and business bankruptcy can be of tremendous importance. Depending on the organizational structure of your business, that distinction may be difficult to make. While bankruptcy can be a powerful tool for giving hardworking but struggling business owners a second chance, it is crucial to understand what impact business bankruptcy may have on your personal finances, and vice versa, before embarking on the process.