Recommend Improvements to the Consumer Bankruptcy System
The ABI Commission on Consumer Bankruptcy was created in December 2016 to research and recommend improvements to the consumer bankruptcy system that can be implemented within its existing structure. The Commission’s Final Report contains recommendations for amendments to the Bankruptcy Code, and to the Federal Rules of Bankruptcy Procedure, designed to make the consumer bankruptcy system more accessible and efficient for both financially struggling Americans and the professionals who serve them. After soliciting public feedback, Commission members identified nearly 50 discrete issues for study and divided these issues among three advisory committees composed of 52 bankruptcy professionals.
The Comissions’ NUMBER ONE RECOMMENDATION for what amendment was most needed, to present Bankruptcy Law is to amend Bankruptcy Law regarding how student loan debt is treated in Bankruptcy. Here is that recommendation of the Commission:
Recommendation Student Loans Student loan debt significantly depresses U.S. economic activity, and current bankruptcy law ineffectively addresses it. The Commission recognizes that recent graduates should generally be required to repay government-made or guaranteed student loans, but it recommends statutory amendments to discharge student loans that are • made by nongovernmental entities; • incurred by a person other than the person receiving the education; • being paid through a five-year chapter 13 plan; or • first payable more than seven years before a chapter 7 bankruptcy is filed. In addition, the Commission recommends administrative procedures and interpretations of current law to facilitate reasonable relief from student loan indebtedness. [as reported by American Bankruptcy Institute e-newsletter on 8/1/21]