I have written here before on how student loans are non-dischargeable in bankruptcy, absent financial hardship, as well as ways one could possibly prove said hardship. Over the years, these loans have been tougher and tougher to get rid of, the latest stroke being the 2005 changes to the bankruptcy laws that included non-guaranteed student loans in the "nondischargeable" category. However, today I can report that there is some hope for those owing student loans not guaranteed/backed by the government.
Yesterday, the House Judiciary Subcommittee on Commercial and Administrative Law approved on a 6-3 party line vote the Private Student Loan Bankruptcy Fairness Act (H.R. 5043). Hopefully, if passed, this bill will restore fairness in student lending by treating privately issued student loans in bankruptcy the same as other types of private debt. Under the bill, privately issued student loans will once again be dischargeable in bankruptcy.
From here the bill goes before the full Judiciary Committee. Hopefully, action will be taken by this Committee before the end of the year. A similar bill has been introduced in the Senate (S. 3219) by Senators Durbin (D, IL), Whitehouse (D, RI) and Franken (D, MN). The sea change that was the enactment of BAPCPA (Bankruptcy Abuse Protection and Consumer Protection Act) in 2005 happened before we entered this "Great Recession" when times were good and legislators were able to convince themselves that a significant number of people were abusing the bankruptcy laws in unfairness to creditors. Hopefully, this bill is a sign that Congress may now realize that people are really hurting, and that the harsher provisions of BAPCPA need to be repealed in order to give people the relief, and fresh start, that they need. Let's hope that happens!
Yesterday, the House Judiciary Subcommittee on Commercial and Administrative Law approved on a 6-3 party line vote the Private Student Loan Bankruptcy Fairness Act (H.R. 5043). Hopefully, if passed, this bill will restore fairness in student lending by treating privately issued student loans in bankruptcy the same as other types of private debt. Under the bill, privately issued student loans will once again be dischargeable in bankruptcy.
From here the bill goes before the full Judiciary Committee. Hopefully, action will be taken by this Committee before the end of the year. A similar bill has been introduced in the Senate (S. 3219) by Senators Durbin (D, IL), Whitehouse (D, RI) and Franken (D, MN). The sea change that was the enactment of BAPCPA (Bankruptcy Abuse Protection and Consumer Protection Act) in 2005 happened before we entered this "Great Recession" when times were good and legislators were able to convince themselves that a significant number of people were abusing the bankruptcy laws in unfairness to creditors. Hopefully, this bill is a sign that Congress may now realize that people are really hurting, and that the harsher provisions of BAPCPA need to be repealed in order to give people the relief, and fresh start, that they need. Let's hope that happens!
