A Joe Biden presidency could open the door to the first major revision in 15 years to the nation’s consumer bankruptcy laws, a critical financial backstop for Americans overwhelmed by debt, WSJ Pro Bankruptcy reported. Biden, the Democratic presidential candidate, has proposed changes that would make it easier for struggling borrowers to file for bankruptcy and reduce the cost of doing so, embracing Sen. Elizabeth Warren’s (D-Mass.) platform for rolling back amendments to the Bankruptcy Code he voted for when he was a senator in 2005. Overhauling the consumer bankruptcy system is one of the issues that catapulted Warren to the national stage in the 2000s, as one of the nation’s leading bankruptcy law experts and a professor at Harvard Law School. The Warren platform adopted by Mr. Biden would eliminate barriers that for decades have prevented people from having student loans forgiven in bankruptcy. Other changes would make it easier for homeowners to modify underwater mortgages in bankruptcy and bolster protections for renters to prevent evictions. Fewer people have filed for bankruptcy during the coronavirus pandemic as a combination of stimulus benefits and moratoriums on foreclosures and evictions have kept millions of people afloat. But experts say the number of bankruptcies is expected to eventually surge if unemployment remains high and coronavirus relief programs expire. In contrast to his Democratic rival, President Trump isn’t expected to push for changes to consumer bankruptcy law if he is re-elected. The amendments Mr. Biden supported in 2005 were backed by the credit-card industry and increased upfront costs to file bankruptcy. The extra expense and paperwork have prevented the most economically disadvantaged Americans from filing for bankruptcy, lawyers and professors say. Biden has said that regardless of his vote, the 2005 changes would have been passed by a Republican-controlled Congress and signed into law by then-President George W. Bush, and that by supporting the bill Biden was able to improve the legislation to prioritize protections for alimony and child-support payments.
