Rep. Pramila Jayapal has partnered with Senators Elizabeth Warren and Sheldon Whitehouse to reintroduce the Consumer Bankruptcy Reform Act, aiming to simplify the bankruptcy process and reduce its costs for individuals and families in financial distress.
The bill, which has the support of Rep. Jerry Nadler, Ranking Member of the House Judiciary Committee, focuses on addressing inequalities within the current bankruptcy system. It proposes a streamlined process with a unified system that reduces filing fees, making it more accessible for those facing financial hardship.
One significant provision of the bill is its potential to overturn a 2005 law that made student loan debt non-dischargeable in bankruptcy. Advocates argue that this change will provide much-needed relief to borrowers struggling with educational debt. The bill also seeks to protect vital assets such as homes and cars during bankruptcy proceedings, while preventing evictions for renters.
“Bankruptcy is a crucial tool for individuals who are drowning in debt to regain stability, yet the current U.S. bankruptcy system is broken,” Jayapal stated. “It’s overly complex, outdated, and often inaccessible to low-income families. This bill would simplify the process, reduce costs, and close loopholes that allow exploitative companies to take advantage of the system.”
This legislation comes in response to the increasing financial strain on American households, with rising costs for housing, education, healthcare, and childcare, alongside stagnant wages. Many families are overwhelmed by debt, and the current bankruptcy system, with its high costs and restrictive rules, often fails to offer them an effective way out.
Senator Warren, who first introduced the bill in 2020, emphasized the need for change. “People generally file for bankruptcy due to job loss, medical issues, or family crises. But they often face a costly and complicated process. This bill will simplify and modernize the bankruptcy system, making it easier and more affordable for individuals to find relief,” she said.
Consumer protection organizations and legal experts have shown strong support for the bill. John Rao from the National Consumer Law Center noted that the legislation would help families currently unable to seek bankruptcy relief due to its prohibitive costs. Christine Chen Zinner of Americans for Financial Reform stressed that the bill would address systemic disparities, particularly those impacting Black, Latine, and lower-income communities who are disproportionately affected by debt.
Jayapal framed the bill as part of a broader push for economic justice, emphasizing its role in creating a fairer financial system. “This is about ensuring that everyday people have the opportunity to recover and thrive,” she concluded.
