We previously discussed efforts by U.S. lawmakers to push legislation to allow student loan debt to be discharged in bankruptcy. The Student Borrower Bankruptcy Relief Act of 2019 was introduced by Senator Dick Durbin (D-Illinois) and gained the support of Democratic presidential contender Elizabeth Warren.
Recently, Warren proposed a more universal overhaul to U.S. personal bankruptcy laws, according to CNBC. She seeks to repeal some provisions in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (S.256) which complicate the bankruptcy process for consumers.
Warren vigorously opposed S.256 when it was first being considered by Congress. She also had a role in establishing the Consumer Financial Protection Bureau in response to the 2008 financial crisis. Since its creation, the regulatory agency has returned nearly $12 billion to consumers.
What provisions does the plan do away with?
The plan could make it easier for people struggling with debt to receive relief through bankruptcy.
“My plan streamlines the process, reduces costs, and gives people more flexibility in bankruptcy to find solutions that match their financial problems,” Warren wrote in the plan.
Here's what the plan would do away with:
- Paperwork requirements
- Filing fees for people living below the poverty line (which currently costs $1,200 for Chapter 7)
- Upfront attorneys' fees for Chapter 7 filers (would be paid during or after bankruptcy)
- Rules requiring lawyers to certify the accuracy of financial disclosures and provide financial advice (which would reduce the cost of hiring a lawyer)
- Rules that make it nearly impossible to discharge student loan debt
Will the proposed plan give consumers more options?
Warren's plan also takes aim at Chapter 13. While Chapter 13 costs more money in the long-run than Chapter 7, many people living under the poverty line are drawn to it. That's because it allows filers to avoid foreclosures and pay their debt through installments.
“The menu of options available would include a Chapter 7-type option of surrendering all non-exempt property in exchange for having their unpaid debts ‘discharged,’ as well as options that allow people to deal with specific financial problems without involving all of their obligations,” she wrote.
What are my options for filing bankruptcy?
The bankruptcy attorneys at Benjamin R. Matthews and Associates, LLC know how difficult filing bankruptcy is for the average consumer. We know that the odds are often stacked against hard-working people who are drowning in debt. That's why we want to help make the process easier if you are considering filing bankruptcy.
Our legal team will help you choose a bankruptcy option that best suits your financial needs. We'll ensure that all paperwork is filled out correctly and all documents are present. We serve clients all over South Carolina. Contact us online to find out how we can help you.