This economy is pushing struggling families to the breaking point, and our bankruptcy laws make it harder for them to get back on their feet. That's not right. I've got a plan to overhaul our consumer bankruptcy rules. elizabethwarren.com/plans/bankrupt…
I spent most of my career studying why American families go broke. What I discovered was that they weren't reckless or irresponsible—they were being squeezed by an economy that forced them to take on more debt, and one bad break sent them tumbling over the edge.
In 2005, the banking industry pushed through a bill to change our bankruptcy laws so they could squeeze everything they could out of families. The bill hit working families hard and resulted in 250,000 more foreclosures during the financial crisis. It's time for an overhaul.
My plan starts by making it easier for people being crushed by debt to obtain relief through bankruptcy by streamlining the process, reducing the costs of filing, and giving people more flexibility in bankruptcy to find solutions that match their financial problems.
Bankruptcy law places certain spending limitations on people while they’re in the process of bankruptcy. My plan pares back some of those burdensome limits—like those that prevent families from paying rent—so families have a chance to recover after the bankruptcy process.
We have a student loan debt crisis in America in part because our bankruptcy system makes it nearly impossible to get rid of that debt, even when you have nothing left. While I'm fighting to cancel student loan debt, I'll also fight to make that debt dischargeable in bankruptcy.
My plan also makes it easier for people to protect their homes and cars in bankruptcy so they can start from a better foundation as they try to rebuild their financial lives.
Bankruptcy also doesn’t affect all people equally. Women and people of color are more likely to file for bankruptcy, which is partly a reflection of wealth and income disparities. I'll take additional steps to target specific problems to help eliminate these shameful disparities.
Finally, I'll close the loopholes that allow the wealthy and corporate creditors to abuse the bankruptcy system at the expense of everyone else.
The banking industry wants you to believe people who file for bankruptcy are reckless or irresponsible. The truth is that they're struggling with rising costs and flat wages. One crisis is enough to send them over the edge. They don’t need shaming. They need relief.
