To provide that chapter 1 of title 9 of the United States Code, relating to the enforcement of arbitration agreements, shall not apply to enrollment agreements made between students and certain institutions of higher education; and to prohibit limitations on the ability of students to pursue claims against certain institutions of higher education.
To require the Consumer Financial Protection Bureau to meet its statutory purpose, and for other purposes.
Federal lawmakers say injured veterans who file for bankruptcy shouldn’t be forced to use their disability payments to pay off credit-card companies and other lenders, WSJ Pro Bankruptcy reported. Injured and disabled veterans who receive checks from the Department of Veterans Affairs and Department of Defense must classify those payments as disposable income if they file for bankruptcy protection. “Forcing our veterans and their families to dip into their disability-related benefits to pay off bankruptcy creditors dishonors their service and sacrifice,” said Sen. Tammy Baldwin (D., Wis.). “These benefits are earned, and we must do right by our veterans and protect their economic security, especially during challenging times.” Some legal experts say the rules for veterans’ disability payments are a mistake made when consumer bankruptcy laws were overhauled in 2005. “We have pretty sophisticated support for service members, but for veterans, the support that we’ve promised breaks down,” said Georgia State University law professor Jack F. Williams, who has pushed to make bankruptcy relief easier for veterans for more than a decade. Academic researchers who have studied military issues have found that veterans are more likely to struggle financially. A 2017 study from Stanford University found that veterans make up a larger portion of people who have filed for bankruptcy protection.
U.S. Senators Tammy Baldwin (D-Wis.) and John Cornyn (R-Texas) today introduced the bipartisan Honoring American Veterans in Extreme Need (HAVEN) Act (S. 679) to protect the economic security and well-being of veterans and their families who rely on disability benefits and may be experiencing financial hardship, according to a press release. Under current bankruptcy law, disability benefits paid by the Department of Veterans Affairs (VA) and Department of Defense (DoD) are included in the calculation of a debtor’s disposable income, increasing the portion of the debtor’s income that is subject to the reach of creditors. By contrast, bankruptcy law explicitly exempts Social Security disability benefits from this calculation. To remove this unequal treatment among various disability benefits, the HAVEN Act would exclude VA and DoD disability payments made to veterans or their dependent survivors from the monthly income calculation used for bankruptcy means tests. “Forcing our veterans and their families to dip into their disability-related benefits to pay off bankruptcy creditors dishonors their service and sacrifice. These benefits are earned, and we must do right by our veterans and protect their economic security, especially during challenging times,” said Baldwin. Cornyn added that “disabled veterans fought for their country at great cost, and they shouldn’t need to fight to protect their disability benefits from creditors during bankruptcy.” Holly Petraeus, member of ABI's Veterans' Task Force and former Assistant Director of the Consumer Financial Protection Bureau, Office of Servicemember Affairs, said that she was surprised to learn that a flaw in the Bankruptcy Code was denying disabled veterans the protections that it offered to all other Americans receiving disability income. "The HAVEN Act fixes that flaw, and I’m happy to join its many bipartisan co-sponsors as an individual sponsor of the bill,” Petraeus said. For more information on the HAVEN Act, please click here.
To read the full bill text, please click here.
For more on this issue, be sure to read this November ABI Journal article or listen to this special ABI podcast.
Rep. Tim Ryan (D-Ohio) said that he plans to reintroduce 2017 legislation that would define worker claims in bankruptcy as administrative expenses, meaning they’d be paid in full, like the investment bankers, consultants, lawyers and liquidators who earn millions of dollars dismantling dying companies, Bloomberg News reported. It comes after 19 Democrats, including Ryan and presidential candidates Bernie Sanders and Tulsi Gabbard, teamed up in July to demand answers from Toys “R” Us’s owners after its bankruptcy left workers in the lurch. Rep. Alexandria Ocasio-Cortez (D-N.Y.) released a video featuring struggling former Toys “R” Us workers on the first Black Friday since their layoffs. And Sen. Elizabeth Warren (D-Mass.), another 2020 candidate, publicly challenged former Sears Chairman Eddie Lampert’s “commitment to the company’s employees” in a January letter. Ryan's bill would prioritize pension claims for fired workers when their companies go under. It joins legislation to hike taxes on the wealthiest Americans, provide wage and leave guarantees and restrict corporate share buybacks. Though the bill is a longshot to become law because it would have to pass the Republican Senate, it could lead to legislation on the state level that would complicate the bankruptcy process.
The House Appropriations Subcommittee on Labor, Health and Human Services, and Related Agencies will hold a hearing tomorrow at 10:30 a.m. EDT titled "Protecting Student Borrowers: Loan Servicing Oversight." Click here for the witness list and for a link to the live webstream for tomorrow's hearing.
