The Student Borrower Bankruptcy Relief Act of 2019

Here at Shenwick & Associates, one of the most difficult issues for our clients (especially younger ones) is student loan debt, which is now over $1.5 trillion (that’s not a typo), far eclipsing other types of consumer debt.  As we’ve discussed many times in our posts, most courts follow the “undue hardship” Brunner test,  which makes it almost impossible to discharge student loan debts in bankruptcy.

However, relief may be on the horizon, as more opinion leaders and courts express opposition to the Brunner factors.  Earlier this month, members of Congress (including Sens. Elizabeth Warren (D-Mass.) and Dick Durbin (D-Ill.), along with Reps. Jerrold Nadler (D-N.Y.), John Katko (R-N.Y.) and Joe Neguse (D-Colo.)) introduced the Student Borrower Bankruptcy Relief Act of 2019, which would eliminate the section of the bankruptcy code (523(a)(8)) that makes private and federal student loans nondischargeable, allowing these loans to be treated like nearly all other forms of consumer debt.

The bill should easily pass the House.  No bill text is available yet, but we’re sure we’ll be writing about this vexing issue again soon.  For trusted bankruptcy advice on all types of debt, please contact Jim Shenwick.