Student Loans and Other Doings for the ABI Consumer Bankruptcy Commission

The American Bankruptcy Institute's Commission on Consumer Bankruptcy has been hard at work (Full disclosure: I am the Commission's reporter.) Yesterday, the Commission submitted written comments to the Department of Education's request for information (RFI) on the "undue hardship" standard for the discharge of student loans in bankruptcy. As the Commissions make clear in the cover letter, our comments respond to the RFI and thus focus on what can be accomplished at the regulatory level. Recommendations for statutory change will appear in our final report. Indeed, we had intended to release only the complete set of recommendations at the end of our work, but given the Department of Education's RFI, the Commission voted to release its recommendations that were responsive.

The Commission's recommendations fall into two broad categories. First, the Commission advocates for the adoption of bright-line rules that will identify persons for whom repayment of student loans will be an undue hardship, such as an existing governmental determination of disability or income below 150% of the federal poverty line. Second, the Commission made a number of recommendations around the judicially crafted Brunner test that courts use to determine undue hardship. You can read the full set of recommendations from the link above.

Student loans are an important part, but only a part, of the Commission's overall work. Over the past year, the Commission and its committees conducted seven public meetings in which we heard from seventy-eight witnesses. The Commission held its public meetings in connection with meetings for the National Association of Consumer Bankruptcy Attorneys, the National Association of Bankruptcy Trustees, the National Association of Chapter 13 Trustees, the National Conference of Bankruptcy Judges, and at ABI events. The Commission received 131 written comments. You can view the public meetings and read the written statements submitted for those public meetings on our website. The Commission has no more public meetings scheduled.

The Commission has three advisory committees. Each of the committees has a majority of members who are not commissioners, and like the Commission itself, committee membership is representative of all the stakeholders in the bankruptcy system. The committees considered the topics assigned to them and developed reports with recommendations to the Commission. The three committees together have produced fifty reports and have met forty-five times to debate them. The starting points for the Commission's discussions are these committee reports. Thus, there is overlapping yet independent consideration of the various topics, producing recommendations that come from a careful deliberative process that considered all points of view.

The committee work is largely complete. The Commission will meet privately throughout the summer to finish its review of the committee reports. I will be putting together drafts of our final report for the Commission to review and approve (so probably still not much blogging from me). The Commission report will heed the charge from the ABI's board of directors to research and recommend "improvements to the consumer bankruptcy system that can be implemented within its existing structure. These changes might include amendments to the Bankruptcy Code, changes to the Federal Rules of Bankruptcy Procedure, administrative rules or actions, recommendations on proper interpretations of existing law and other best practices that judges, trustees and lawyers can implement."