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A bankruptcy court in New York is making it easier for borrowers with financial difficulties to modify their student loans through negotiation, potentially reducing their monthly payments to amounts they can more easily afford, the Wall Street Journal reported. Chief Bankruptcy Judge Cecelia G. Morris, who oversees bankruptcy courts in Manhattan and White Plains, N.Y., introduced a program on Monday designed to resolve student loan disputes through a court-supervised mediation process. The program, which aims to resolve disputes through mediation before resorting to litigation, enables borrowers and their student loan lenders to discuss repayment options. It is open to any borrower who has a student loan with a bankruptcy case pending in the Southern District of New York, which also includes Judge Morris’s court in Poughkeepsie, N.Y. Judge Morris’s mediation program is modeled on the bankruptcy court’s mortgage loss mitigation program, created during the mortgage foreclosure crisis. Many other bankruptcy courts throughout the country have similar loan modification programs that require homeowners and mortgage lenders to go through mediation in hopes of staving off foreclosure. The U.S. Bankruptcy Court for the Middle District of Florida has a similar program in place, referred to as the student loan modification program, that went into effect last year. The program sets the reasonable attorney fee for assisting an application for loan modification at $1,500, far less than the typical fee of more than $10,000 to handle student loan adversary proceedings, said Jason Iuliano, a bankruptcy law professor at Villanova University. The Florida program helps people get current with their payments and provides them an opportunity to restructure, said John Alper of Oviedo, Fla., law firm Alper Law, which specializes in bankruptcy. But “there’s nothing that the courts are going to do that could force the lenders to modify,” he said. Both the New York and Florida programs establish a process to facilitate document exchange and communication, and encourage negotiations between student loan borrowers and their creditors to reach settlements. “It’s hard to say how this will go,” said Prof. Robert M. Lawless of the University of Illinois College of Law, who served as the official reporter on ABI's Commission on Consumer Bankruptcy. “It’s often not so much what’s written on the paper, but how it actually ends up working out in practice that determines how well they do. A lot of it depends upon the willingness of the parties to talk through differences.”

Bankruptcy judges are used to deciding the value of assets, but for cryptocurrencies, which can halve or double in value in a matter of months, determining how much one party is owed gets tricky, Roll Call reported. It’s an issue that could be mitigated by regulators or lawmakers, but despite myriad efforts focusing on digital assets this year, U.S. bankruptcy judges are unlikely to get much guidance, according to several lawyers who track the cryptocurrency industry. Judges are dealing firsthand with issues of how to value cryptocurrencies, and whether bitcoin can even be classified as money, as policymakers tackle more existential issues, such as which agencies should regulate them or whether to take no action at all. “For better or for worse, it is the courts who are going to be making the rules,” said Joanne Molinaro, a partner and trial lawyer with Foley & Lardner LLP’s Chicago office and a member of the firm’s Blockchain and Cryptocurrency Task Force. Alan Rosenberg, an attorney with Miami-based bankruptcy law firm Markowitz, Ringel, Trusty, & Hartog PA and a member of the American Bankruptcy Institute, notes that federal agencies and courts each have classified digital assets as currencies or commodities, which affects how they are valued and what constitutes illegal conduct when handling them.