Pressure grows on Biden administration to change student loan bankruptcy rules

워싱턴 Pressure is growing on the Biden administration to make it easier to discharge student loan debt in bankruptcy.

President Joe Biden campaigned on reforming the bankruptcy system, which currently makes it extremely difficult for student loan debt to be discharged. Borrowers must meet a high burden of proof: that paying the loans off would causeundue hardship.
Last fall, Biden’s federal student aid chief, 리처드 코드 레이, told Congress that the Department of Education had started discussing reforming student loan bankruptcy rules. But the agency more recently has actively fought borrower relief in federal bankruptcy court.
    Since the start of the year, government lawyers appealed two separate bankruptcy decisions in which judges sided with borrowers, allowing their student loan debt to be discharged. The government quickly dropped the appeals, but not before drawing attention to what borrower advocates called astubborn commitmentto a flawed policy.
      Withdrawing opposition to individual student debt discharges based on media pressure isn’t a solution,” said Dan Zibel, vice president and chief counsel at the National Student Legal Defense Network, 성명서.
        The agency is essentially playing whack-a-mole with struggling familiesfinances,” 그는 덧붙였다.
        The National Student Legal Defense Network led a coalition of several advocacy groups last week in calling on the Department of Education to immediately pause all efforts to oppose or appeal student debt discharges in bankruptcy court.
          A Department of Education spokesperson told CNN this week that the agency iscommitted to revising its approach to bankruptcy to streamline the process and ensure that borrowers get a fair shot.
          “그동안, ED and the Justice Department are working to ensure that the government does not appeal bankruptcy cases where the borrower has proven an undue hardship,” the spokesperson said in an emailed statement.

          Student debt is rarely discharged in bankruptcy

          Student debt is treated differently in bankruptcy court than other kinds of debts, making it difficult, but not impossible, to be granted a discharge.
          An individual must bring a separate lawsuit specific to his or her student debt within the bankruptcy proceeding, known as anadversary proceeding. The borrower must prove that paying off the student loans will impose anundue hardshipfor him or her and any dependents.
          역사적으로, most courts use what’s known as theBrunner testto evaluate whether the borrower has shown an undue hardship, according to the National Consumer Law Center. It requires showing that he or she cannot maintain a minimal standard of living if forced to repay the student loans, that this financial situation will continue for the majority of the loan repayment period and that a good faith effort has been made to pay.
          It doesn’t work well,” Cordray said at 그만큼 House committee hearing last year.
          Under the current rules, those struggling with bankruptcyare forced to go into courtif you can imagine such a thingand recount how miserable their lives are in order to beg for some kind of bankruptcy relief and rarely get it,” 그는 말했다.

          Two borrowers recently granted relief

          While it’s rare that a judge agrees to discharge student loan debt in bankruptcy, it happened twice so far this year.
          In mid-January, a bankruptcy judge in Delaware approved the discharge of about $ 95,000 in student loans for Ryan Wolfson, ㅏ 2010 Penn State University graduate who initially filed for bankruptcy in 2019, 법원 문서에 따르면.
          Wolfson, 35, showed that he has had difficulty finding a job that pays enough to cover his expenses, made harder by his epilepsy. He was working as a delivery driver until 2019 when he suffered a seizure while driving and totaled his car.
          Since graduating from college, this debtor could not afford a modest apartment, food to eat or basic transportation without the assistance of his father,” wrote Chief Judge Laurie Selber Silverstein in her decision.
          It is not for want of a work ethic. His assortment of jobs, even while working full time, did not permit repayment of his student loans. As there is no evidence to suggest that his plight will improve, Wolfson is entitled to a discharge,” 그녀는 덧붙였다.
          In a separate case, a judge approved the discharge of more than $ 110,000 in student debt for Monique Denise Wheat, a 32-year-old single mother in Alabama, 법원 문서에 따르면. The judge similarly found that paying off the debt would create anundue hardshipfor Wheat.
          Wheat earned a bachelor’s degree in criminal justice from Troy University and also incurred debt pursuing a master’s degree in clinical counseling at Bellevue University, but did not complete her degree. She hasn’t found work related to her degree and works as a patient tech at a medical center.
          But the Department of Education appealed both of those rulings, as first reported by the Daily Poster, an investigative journalism website, and then withdrew its opposition within days.
          ED does not support an appeal and understands that the notice of appeal was filed by DOJ as a procedural matter. We have asked that the notice be withdrawn,” wrote Department of Education Under Secretary James Kvaal 트위터에서 last week in reference to Wheat’s case.
          The department’s spokesperson also noted that while the pandemic student loan payment pause remains in effect until May 1, any borrower in an adversary bankruptcy proceeding can request and receive a stay on their proceedings.

          Proposed reforms

          Legislation from Congress is needed to reform the bankruptcy code, but some lawyers argue that the Department of Education can also stop opposing so many requests to discharge student loans in bankruptcy proceedings.
          The Department can use its current administrative authority to halt its practice of contesting the discharge of student loans in its borrowersbankruptcy cases,” according to a legal essay published last year in the Minnesota Law Review. It was written by Cardozo School of Law Professor Pamela Foohey, as well as Zibel and National Student Legal Defense Network’s president Aaron Ament.
            Proposed legislation to reform the bankruptcy system has some bipartisan support. ㅏ bill that would make it easier to discharge student loans in bankruptcy was introduced last year by Sen. 딕 더빈, a Democrat from Illinois, Schumer는 Biden 행정부에 아이티로의 추방을 중단하도록 촉구하기 위해 수십 명의 민주당원과 합류했습니다.. 존 코닌, 텍사스 출신의 공화당원.
            바이든 endorsed a bankruptcy reform proposal from Massachusetts Sen. Elizabeth Warren on the 2020 캠페인 흔적, in an effort to attract the party’s left-wing voters. The plan called for allowing student loan debt to be discharged in bankruptcy just like other debts.

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