Senators Durbin & Whitehouse, Representative Lofgren, and Chief Economist Dr. Zandi Join NACBA and NCLC to Discuss the Importance of Bankruptcy Reform in the time of COVID-19 and Beyond

Senators Durbin & Whitehouse, Representative Lofgren, and Chief Economist Dr. Zandi Join NACBA and NCLC to Discuss the Importance of Bankruptcy Reform in the time of COVID-19 and Beyond

For Immediate Release

The National Association of Consumer Bankruptcy Attorneys (NACBA) and National Consumer Law Center (NCLC) on Wednesday hosted a Congressional and expert panel featuring Senator Dick Durbin (D-IL), Senator Sheldon Whitehouse (D-RI), Congresswoman Zoe Lofgren (D-CA), and Chief Economist at Moody’s Analytics Dr. Mark Zandi calling on Senate to prioritize bankruptcy protections to help families and small business owners in upcoming bills, several of which were included in the House-passed HEROES Act.

The Coronavirus pandemic will leave devastating financial consequences for families and small business owners as many continue to lose their jobs and businesses close, ultimately leading millions to file for bankruptcy over the next few years. Immediate and substantial amendments to our nation’s Bankruptcy Code are needed to prepare for the expected increase in consumer debt, which is already at an all-time high. “It’s safe to assume that a wave of bankruptcy filings is on the way,” said Senator Dick Durbin. “Now is the time for bankruptcy reform. Whether it is finding ways to help families save their homes in bankruptcy, to restoring dischargeability of student loans, to reforming the Chapter 11 process to better protect workers and retirees instead of corporate executives; we must end years of delay and finally make our bankruptcy system fairer.”

Economist Mark Zandi highlighted that importance of Congress updating bankruptcy tools, given the current economic conditions, noting that “bankruptcy is a very critical tool for households to manage their financial problems.”

While a wave of consumer and individual bankruptcies has not hit yet largely because of the relief that was delivered in the early stages of the crisis, Congresswoman Zoe Lofgren warned it is coming. “But let’s not fool ourselves; more and more American families are likely to need bankruptcy relief especially as the economic damage deepens,” Rep. Lofgren explained. “In the HEROES Act… in addition to the relief given to individuals, there are several critical reforms to the bankruptcy system. To be honest, these reforms should have been included a long time ago.”

Other issues not included in the HEROES Act bankruptcy provisions, but very critical to address, are the dischargeability of student loans and debts for criminal court costs and fees. Senator Sheldon Whitehouse also pointed to the help people will need as a result of medical debt. He revealed that he, alongside Sens. Durbin, Brown and Warren, have filed a medical bankruptcy bill that addresses the problems dating back to the bankruptcy amendments of 2005 to help people forced into bankruptcy by medical debt. “These things are almost always unanticipated, massively expensive and uncontrollable,” Sen. Whitehouse explained.

Watch the full recording of the Congressional and expert panel below. To read a full list of bankruptcy provisions included in the HEROES Act visit NACBA News. Questions can be directed to Krista D’Amelio, Director of Government Affairs & Communications: krista.damelio@nacba.com.

 

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