107 Iowa L. Rev. 2365 (2022)

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Abstract

As the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”) recedes further into the rearview mirror, discretionary issues that were left to the bankruptcy courts to resolve are more divisive across jurisdictions than ever. This Note discusses one such issue—the treatment of Social Security income (“SSI”) in bad faith analyses for individual consumer debtors in chapter 7 and 13 bankruptcy relief. This Note answers the question to what extent, if any, such benefits should be included in a bad faith analysis by bankruptcy courts, assuming a debtor has otherwise satisfied the requirements for relief under the Bankruptcy Code. This Note first provides insightful historical context into bankruptcy law developments in the United States, then lays out the relevant interpretive issues from a statutory perspective, and finally examines the various solutions and positions that have thus far been adopted. This Note argues that the best of these solutions is the adoption of the majority view—that exclusion of Social Security benefits cannot rise to the standard of bad faith—by the bankruptcy courts, and the amendment of the BAPCPA.