The American Bankers Association expressed its opposition today to two bills that would change the bankruptcy code, writing in a memo to the House Judiciary Committee that the “bills would increase the cost of borrowing and reduce the availability of credit.” The Student Borrower Bankruptcy Relief Act (H.R. 2648) and the Protecting Homeowners in Bankruptcy Act (H.R 8366) are “bad public policy at a time where individuals and businesses continue to struggle with the challenges of the COVID-19 emergency,” the association wrote.
H.R. 2648 would allow anyone to wipe out student loans in bankruptcy, regardless of ability to pay, even if it’s not an “undue hardship” to repay, which would ultimately increase the costs of student lending, ABA pointed out.
H.R. 8366 establishes a federal homestead exemption of $100,000 and overrides state laws on those exemptions in bankruptcy. The bill would “increase risk for home mortgage lenders and therefore raise borrowing costs for all future home borrowers,” ABA wrote.