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Rep. Jayapal renews push to simplify bankruptcy system
Jayapal underscored the broader implications of the bill, framing it as part of an effort to ensure economic justice for everyday Americans. “This is about leveling the playing field for everyday people,” she said.
Pramila Jayapal / Image- jayapal.house.gov
Indian American Congresswoman Pramila Jayapal has joined Senators Elizabeth Warren and Sheldon Whitehouse in reintroducing the Consumer Bankruptcy Reform Act, a legislation aimed at simplifying the bankruptcy process and reducing costs for individuals and families.
The bill, backed by Representative Jerry Nadler, Ranking Member of the House Judiciary Committee, seeks to address systemic inequities and barriers in the current bankruptcy system and intends to streamline the consumer bankruptcy process through a unified system, reducing filing fees and making it more accessible for financially distressed individuals.
If approved, it would reverse a 2005 law that made student loan debt nondischargeable in bankruptcy, a move that advocates say will provide relief to borrowers burdened by educational expenses. Additionally, the bill aims to protect essential assets like homes and cars during bankruptcy proceedings and includes provisions to prevent evictions for renters.
“Bankruptcy is a critical tool to help people who have fallen into debt get back on their feet, but the United States’ consumer bankruptcy system is broken,” Jayapal said. “It is overcomplicated, outdated, and often inaccessible for poor and working families. This legislation would simplify the process, reduce costs, protect homes and cars, and close loopholes that allow predatory companies to exploit the system.”
The legislation responds to the growing financial challenges faced by American households. Rising costs of housing, education, medical care, and childcare, coupled with stagnant wages, have left many families struggling under the weight of debt. Advocates argue that the current bankruptcy system fails to offer adequate relief, with high filing costs and restrictive provisions excluding many individuals from meaningful recovery.
Senator Warren, who initially introduced the bill in 2020, noted the urgency of these reforms. “People typically file for bankruptcy because of a job loss, a medical problem, or a family breakup. When they do, they’re faced with an expensive and complicated system. My bill would simplify and modernize the consumer bankruptcy system to make it easier and less expensive for people to get relief,” Warren said.
Consumer advocacy organizations and legal experts have expressed strong support for the bill. John Rao, at the National Consumer Law Center, emphasized that the legislation would provide a lifeline for families unable to access bankruptcy relief due to prohibitive costs. Christine Chen Zinner, for Consumer Financial Justice at Americans for Financial Reform, highlighted the bill’s potential to rectify disparities in the system, particularly for Black, Latine, and lower-income families disproportionately affected by debt.
Jayapal underscored the broader implications of the bill, framing it as part of an effort to ensure economic justice for everyday Americans. “This is about leveling the playing field for everyday people,” she said.
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