The House Judiciary Committee yesterday approved (19-5) a bill that would extend bankruptcy protections to borrowers with private or federally held student loans, Bloomberg Law reported. H.R. 2648, the "Student Borrower Bankruptcy Relief Act," strikes the section of the Bankruptcy Code that makes it much more difficult for student loan borrowers to discharge their student debt in bankruptcy, Forbes reported. Borrowers must generally prove that they have an “undue hardship” in order to discharge their student loan debt in bankruptcy. These restrictions initially only applied to federal student loans, but were subsequently expanded to cover private student loans following the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The “undue hardship” standard applied to student loan debt is not adequately defined in statute, so bankruptcy judges have established various tests (which vary by jurisdiction) to determine discharge eligibility. Read more.
Click here to view the full text of H.R. 2648.
The House Judiciary Committee also approved other pieces of legislation to amend the Bankruptcy Code, including:
- H.R. 7370, the Protecting Employees and Retirees in Business Bankruptcies Act of 2020 (20-10 vote).
