Before Biden and Warren were at odds for the Democratic Presidential nomination, they faced off against bankruptcy protection laws. Biden successfully stripped them away right before the 2008 housing crisis.
In 2005, Biden pushed through a bill called the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) intended to prevent people from abusing a Chapter 7 bankruptcy filing. Restrictions were made for an income threshold, as well as types of credit card debt, and discharging student loan debt.
GQ called Biden’s 2005 bill “the single piece of legislation most responsible for putting the U.S. in the current student debt crisis”.
Warren was a Harvard Law Professor at the time. She hadn’t been elected as a Massachusetts Senator, yet, but testified against the bill and its detrimental harm to people seeking their right to debt relief.
The bill benefited credit card companies which hold tremendous political power in Biden’s home state, Delaware. He argued against criticism of his questionable allegiances to corporations over the people, but the evidence was stacked against him.
Hunter Biden received a six figure salary from the largest credit card company in Delaware: MBNA. This put his father in hot water due to his business interests.
The GQ article continued: “Melissa Jacoby, a University of North Carolina law professor specializing in bankruptcy, told Politico, ‘I doubt that the bill reined in the abuses that the bill was premised on, in part because they didn’t necessarily exist in the first place.’”
Biden’s campaign team is trying to spin this debacle as a necessary bill to appease Republicans in order to get other legislation passed. The bill did pass with unanimous Republican support, but to what benefit and what cost to US citizens?
The facts are undeniable: BAPCPA stripped borrowers of their rights to bankruptcy protection, rights that are set in the US Constitution, as well as contributed to the trillions of accumulating student debt.
Back in 2018 nine teachers filed a lawsuit against Navient, one of the government’s student loan servicers for misleading borrowers or blocking them from accessing a public service loan forgiveness program. According to the New York Times, out of the 146,000 applicants to the program at the time, only 3,200 saw their student loans forgiven.
Times of crisis always have a significant impact on any country’s economy. Worse, when the country is caught unprepared, and that is what we’ve witnessed around the world. COVID-19 has pushed the “superpowers” to the wall economically, and countries are struggling to remain afloat.
This week Time magazine predicted that a wave of bankruptcy filings for small businesses will ensure following the recovery of Covid-19. The government’s attempts to provide relief for small businesses have been unsuccessful to say the least since their guidelines allow for major corporations to take millions of dollars from the fund.
With cases of COVID-19 now at 586,057, where only 43,637 have recovered, while 23,604 have lost their lives, there is significant damage that’s been dealt to America’s economy. The sad fact is that we are not sure of when this pandemic will end and so the numbers may continue increasing in the foreseeable future.
President Trump signed a bill providing financial relief for Americans struggling in the wake of the coronavirus shutting down all non-essential businesses. Part of that bill granted a six-month suspension period on federal student loan payments until September 30th.
Anyone can qualify to file for bankruptcy. There isn’t an exact amount of debt or financial difficulty required. You don’t have to show insolvency or meet a certain standard.
You should always speak with a lawyer before beginning the bankruptcy process to ensure it’s the best option for you. Michelle Labayen is a knowledgeable and experienced bankruptcy attorney with offices in New York, NY, and Newark, NJ. Florida licensed attorney Drew Gaddis is counsel and would be representing all clients in Florida.