Sen. Elizabeth Warren [D-Mass.] and Rep. Jerry Nadler [D-N.Y.], the chairman of the House Judiciary Committee, this week introduced a bill in Congress that would overhaul the consumer bankruptcy process in an attempt to “simplify and modernize” the process, according to a press release announcing the proposed legislation.
The Consumer Bankruptcy Reform Act of 2020, S.4991 in the Senate and H.R. 8902 in the House has been endorsed by nearly two dozen consumer groups and unions, including the National Consumer Law Center, the National Association of Consumer Advocates, and the Service Employees International Union (SEIU).
If enacted, the bill would combine the two bankruptcy chapters that consumers may use when filing for protection into one chapter, allow student loan debt to be discharged, provide further protections for consumers to keep their homes and cars when filing for bankruptcy protection, ending the special privilege that prevents local government fines from being discharged, ban the collection of consumer debts that violate consumer protection laws, allowing consumers to sue creditors who attempt to collect on debt that has been discharged, and preventing consumers from being forced into mandatory arbitration in the event of a dispute.
“Our bankruptcy system too often fails to provide financially struggling individuals and families the relief they desperately need,” said Sen. Warren, in a statement. “The Consumer Bankruptcy Reform Act of 2020 will take long overdue steps to make it easier and less expensive for financially-strapped families and individuals to obtain meaningful bankruptcy relief and give Americans a better chance to get back on their feet.”
The current bankruptcy process is too “complex, unfair, and even punitive,” said Rep. Nadler in a statement. “The Consumer Bankruptcy Reform Act ensures that the bankruptcy system works for the American people and not just big corporate creditors. Senator Warren and I have worked on this issue for many years, and I look forward to continuing our fight for consumers with this new legislation.”
