On Tuesday, September 29, 2020 the House Judiciary Committee led by Chairman Jerry Nadler (D-NY), held a markup hearing and approved two very important bills enhancing bankruptcy protection for debtors. First, the Committee passed H.R. 2648, the Student Borrower Bankruptcy Relief Act of 2019, one of NACBA’s top legislative priorities, which will restore full dischargeability for student loan debts.
Second, the Committee passed H.R. 8366, the Protecting Homeowners in Bankruptcy Act of 2020, which would create a national homestead exemption floor of $100,000. This exemption would be available to bankruptcy debtors notwithstanding the fact that their own state law may offer a lower exemption amount. This provision is also strongly supported by NACBA and was also included in the Heroes Act passed by the House of Representatives back in May.
Chairman Nadler remarked: “H.R. 2648, the ‘Student Borrower Bankruptcy Relief Act of 2019,’ addresses head-on the manifest unfairness that student loans—unlike every other unsecured debt, such as credit cards or auto loans—are effectively nondischargeable in bankruptcy… The reality is that Americans across the nation are facing crushing student loan debt that is preventing them from increasing their incomes, purchasing homes, buying cars, getting married, and otherwise living the American dream…The bankruptcy process is made for just this kind of crisis. It is an option of last resort, and the consequences of filing for bankruptcy are severe. But it also promises a fresh start so that people can get back up and keep working and providing for their families. That promise rings hollow for many people, however, because student loans—the single largest type of consumer debt—are effectively immune from the bankruptcy process. ” Read the Chairman’s full statement.
While neither bill is likely to become law in the short time remaining of the legislative session this year, it marks a significant achievement having the Judiciary Committee approve them, and will give NACBA momentum to press for passage of this legislation in the next session of Congress.