Stopping Abusive Student Loan Collection Practices in Bankruptcy Act of 2015

Floor Speech

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Mr. CONYERS. Mr. Speaker, the ``Stopping Abusive Student Loan
Collection Practices in Bankruptcy Act of 2015'' targets ruthless
collection tactics employed by some student loan creditors against
debtors who have sought bankruptcy relief, as documented by the New
York Times in its cover story last year.

Specifically, my legislation bill would empower a bankruptcy judge to
award costs and reasonable attorney's fees to a debtor who successfully
obtained the discharge of his or her liability for a student loan debt
based on undue hardship if: (1) the creditor's position was not
substantially justified, and (2) there are no special circumstances
that would make such award unjust. The Bankruptcy Code already grants
identical authority to a bankruptcy judge to award costs and reasonable
attorney's fees to debtor where a creditor requests the determination
of dischargeability of a consumer debt based on the allegation that it
was fraudulently incurred and the court thereafter finds that the
creditor's position was not substantially justified and there are no
special circumstances that would make such award unjust.

Although parties typically do and should pay their own attorney's
fees in litigation, dischargeability determinations concerning student
loan debts present compelling factors that warrant the relief provided
by this legislation. Under current bankruptcy law, debtors must meet a
very high burden of proof, namely, that repayment of the student loan
debt will present an undue hardship on the debtor and the debtor's
dependents. The litigation typically requires extensive discovery,
trial-like procedures, and legal analysis.

Unfortunately, some student loan debt collectors engage in abusive
litigation tactics that exponentially drive up the potential cost of
legal representation for a debtor. As a result, debtors, who may
legally qualify for the Bankruptcy Code's undue hardship
dischargeability exception for student loans, may be unable to obtain
such relief because of the potential risk of excessive and unaffordable
legal fees that the debtor may have to incur not only to meet the high
standard of proof, but also to combat an abusive litigation stance
taken by a well-funded adversary.

The ``Stopping Abusive Student Loan Collection Practices in
Bankruptcy Act of 2015'' will help level the playing field for debtors
overwhelmed by student loan debts, the repayment of which would present
an undue hardship for themselves and their families. It is my hope that
should this measure become law, bankruptcy judges will not hesitate to
award debtors attorney's fees in appropriate cases of abusive
litigation engaged in by student loan creditors.

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