September 28, 2022

Senator Warren and Representative Nadler Reintroduce the Consumer Bankruptcy Reform Act

One Pager (PDF) | Bill Summary (PDF) | Bill Text (PDF) | Letter of Encouragement from National Association of Consumer Bankruptcy Attorneys (NACBA) |Letter of Support from 86 Law Professors (PDF) | Letter of Support from National Consumer Law Center (PDF)

Washington, D.C. – Today, United States Senator Elizabeth Warren (D-Mass.) and House Judiciary Committee Chairman Jerrold Nadler (D-N.Y.) reintroduced the Consumer Bankruptcy Reform Act, bicameral legislation that would simplify and modernize the consumer bankruptcy system and make it easier for individuals and families forced into bankruptcy to get back on their feet. 

Originally introduced in 2020, this legislation would replace the two separate consumer bankruptcy chapters known as Chapters 7 and 13 with a single system available to all consumers, streamlining the filing process and reducing filing fees. The bill would also ensure that families can care for themselves, their children, and their elderly parents during the bankruptcy process by helping renters with back rent avoid eviction, giving people a path to protect their homes and cars, and letting filers discharge local government fines. 

“The Consumer Bankruptcy Reform Act takes long overdue steps to make it a little easier and a little less expensive for people who are in deep financial trouble to get meaningful bankruptcy relief,” said Senator Elizabeth Warren. “I’m grateful to be working with Chairman Nadler on this important legislation to give struggling families a better chance to get back on their feet.”

“Bankruptcy is an option of last resort, but it also promises a fresh start so that people can get back up and keep working and providing for their families,” said Chairman Jerrold Nadler.  “Today that promise rings hollow for many people because the bankruptcy system has become complex, unfair, and even punitive for ordinary consumers. 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.”

“For too many, bankruptcy relief is out of reach due to significant burdens and high costs but this relief is a lifeline to hardworking Americans in need,” said Representative David Cicilline. “The Consumer Bankruptcy Reform Act will remove undue barriers and bring much-needed reforms that will provide all Americans with a fair shot and a second chance at economic opportunity. I thank Senator Warren and Chairman Nadler for their leadership in this effort."

On Thursday, September 29, 2022, Chairman Nadler will hold a hearing of the House Judiciary Committee on our current bankruptcy system and how the Consumer Bankruptcy Reform Act can help close loopholes that allow the wealthy to exploit the bankruptcy system, crack down on predatory practices, and hold corporate wrongdoers accountable.

This legislation is co-sponsored by Senator Sheldon Whitehouse (D-R.I.) and Representative David Cicilline (D-R.I.).

The bill is also supported by: the Action Center on Race and the Economy, the American Federation of State, Country, and Municipal Employees (AFSCME), Americans for Financial Reform, AFL-CIO, Association of Young Americans, the National Association of Consumer Advocates, the Consumer Federation of America, Demos, the National Alliance for Partnerships in Equality, the National Association for Equal Opportunity in Higher Education (NAFEO), the National Consumer Law Center, the Progressive Change Campaign Committee, Public Citizen, Service Employees International (SIEU), UnidosUS, U.S. PIRG, Young Invincibles, Tzedek DC, the Center for LGBTQ Economic Advancement and Research (CLEAR), the Asian Pacific American Labor Alliance, and the Center for Responsible Lending. A group of 86 law professors who specialize in bankruptcy and consumer law have also sent a letter in support of this legislation.

“The Association of Young Americans is proud to endorse the Consumer Bankruptcy Reform Act, reintroduced today," said Lisa Giordano, Executive Director of the Association of Young Americans (AYA). “From student debt to skyrocketing rents nationwide, young Americans today face unique financial challenges. Senator Warren’s and Chairman Nadler’s legislation would be a lifesaver for young people forced into bankruptcy, with its notable provisions to streamline the bankruptcy filing process, ensure rent protections, make student loans dischargeable in bankruptcy, and protect filers from predatory practices and exploitation. AYA is grateful for Senator Warren’s and Chairman Nadler’s leadership and care for young consumers, and strongly advocates for the passage of this bill into law.”

“Senator Warren’s bill would keep those who must declare bankruptcy — disproportionately women and people of color; even more so post-pandemic — from losing everything, including their families’ homes and the cars they need to drive to work to make the money needed to keep a roof over their head,” said Brittany Brady, CEO of National Partnerships for Equity. “There is no reason for a bankruptcy filing to lead to more hardship. Senator Warren’s commonsense bill would establish some much-needed equity by streamlining the difficult, emotionally-fraught process of bankruptcy so that folks can move forward with their lives, their educations, and their careers, and reach financial stability and a place of peace.”

“The Consumer Bankruptcy Reform Act would ensure a financial safety net and allow for sustainable paths of recovery for families struggling with burdensome debt,” said Christine Hines, legislative director for National Association of Consumer Advocates. “We applaud Sen. Warren and Rep. Nadler for their commitment to help Americans get a fresh start, particularly in these perilous financial times.”

“Public Citizen enthusiastically supports this critical set of reforms from Senator Warren and Chairman Nadler," said Lisa Gilbert, Executive Vice President, Public Citizen. “Modernizing and clarifying the consumer bankruptcy system is long overdue, and in this time of national economic crisis, making it easier for individuals and families forced into bankruptcy to get back on their feet is just the right thing to do.”

“U.S. PIRG supports the Consumer Bankruptcy Reform Act, which will re-balance consumer rights to a fairer bankruptcy process and will give them a better chance to reorganize their finances, especially during a pandemic,” said Ed Mierzwinski, Senior Director for Federal Consumer Programs, U.S. PIRG. “Importantly, the proposal includes protections for both homeowners and renters, prohibits and punishes illegal practices by debt collectors and others, addresses racial and gender disparities in the bankruptcy system and eliminates loopholes exploited by the wealthy. Finally, it also eliminates one of the cruelest provisions in U.S. law by removing the provision that makes private and federal student loans non-dischargeable.”

“Young people have struggled to obtain solid financial footing since the Great Recession and the challenges of the Covid-19 pandemic,” said Mervyn Jones, Senior Director of External Affairs at Young Invincibles. “We applaud Senator Warren’s and Chairman Nadler's introduction of the Consumer Bankruptcy Reform Act, which would provide a more straightforward path for economically distressed Americans to move forward. In particular, the bill’s provision to make student loan debt dischargeable would be a much-needed change in law to help struggling student borrowers. This bill’s focus on racial and gender disparities in the bankruptcy system would also foster greater equity and strengthen the strained social safety net.”