June 12, 2014 - Conyers Introduces New Legislation to Protect Student Loan Borrowers

Press Release

(WASHINGTON) – Today, Congressman John Conyers, Jr. (D-Mich.) introduced H.R.4835, the “Stopping Abusive Student Loan Collection Practices in Bankruptcy Act of 2014.” This legislation curtails ruthless collection tactics used by creditors against borrowers who have taken out student loans and sought bankruptcy relief. In particular, the legislation empowers a bankruptcy judge to award both the costs and attorney’s fees to borrowers in bankruptcy cases where student loan creditors engaged in abusive litigation. This legislation comes on the heels of President Obama’s issuance of an executive order earlier this week that allows nearly 5 million Americans struggling with student loan debt the ability to cap their loan payments at 10 percent of their income starting in 2015. In addition, yesterday afternoon House Democrats moved to force a vote on the House companion bill to Senator Elizabeth Warren’s (D-Mass.) “Bank on Students Emergency Loan Refinancing Act,” after the legislation was blocked in the U.S. Senate.

After H.R. 4835 was introduced, Representative Conyers (D-Mich.) issued the following statement:

“With record tuition costs, student loan debt topping $1 trillion nationally, and too few employment opportunities for young Americans, it’s no surprise that our nation’s student borrowers are struggling. As a report in the New York Times revealed in January, even student loans borrowers with terminal illnesses - and who were driven into bankruptcy as a result - have been denied important consumer protections. These mounting challenges have turned into a full-blown crisis; the time is now for the federal government to step in and be a part of the solution,

“Today, I introduced H.R. 4835, the ‘Stopping Abusive Student Loan Collection Practices in Bankruptcy Act of 2014,’ to ensure basic fairness for student borrowers. Unfortunately, some student loan debt collectors engage in abusive litigation tactics that exponentially drive up the cost of legal representation for a borrower. My legislation allows bankruptcy judges to award attorneys fees in cases where a court determines that a borrower’s student loan debt does not have to be repaid in total, due to an undue hardship on the individual and the creditors’ position in opposing this relief was not substantially justified. By empowering bankruptcy judges to award borrower’s attorney’s fees in cases, my legislation will help put a stop to creditors taking advantage of student loan borrowers in the courtroom.

“By ensuring basic legal and consumer protections for students, Congress can help save a generation from being mired in student loan debt. As a matter of fairness and personal opportunity, Congress must stand with our students to level the playing field.”

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This legislation is supported by the National Consumer Law Center, Inc. on behalf of its low-income clients as well as the National Association of Consumer Bankruptcy Attorneys.

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