# Understanding the Stopping Abusive Student Loan Collection Practices in Bankruptcy Act

Right now, when someone files for bankruptcy, student loan companies can use aggressive collection tactics even after the bankruptcy case has started. This bill closes a loophole that allows lenders to keep pursuing borrowers aggressively during bankruptcy proceedings, particularly when those borrowers are trying to argue that their student loans cause them "undue hardship" and should be forgiven.

Here's what's actually happening: Under current law, student loan companies can continue collection activities—like wage garnishment, lawsuits, and aggressive phone calls—while a bankruptcy case is ongoing. Even worse, they can do this while a borrower is specifically asking a bankruptcy court to determine whether their student debt is so burdensome that it should be discharged (eliminated). This creates an unfair situation where lenders keep the pressure on while the court is deciding whether the debt should be wiped away. The bill fixes this by requiring that once someone files for bankruptcy and asks for their student loans to be forgiven due to undue hardship, the lender has to stop these collection activities during that process.

The practical impact is straightforward: if you're drowning in student debt and file for bankruptcy, lenders can't continue harassing you or taking money from your paycheck while a judge is considering whether your situation qualifies for relief. This gives borrowers breathing room during an already stressful legal process and prevents lenders from using intimidation tactics to discourage people from even trying to get their loans forgiven. The change applies to any bankruptcy cases filed after this law would take effect, so it protects people going forward.

Stopping Abusive Student Loan Collection Practices in Bankruptcy Act of 2023

Thanedar, Shri

Stopping Abusive Student Loan Collection Practices in Bankruptcy Act of 2023 This bill requires a bankruptcy court to grant a debtor attorney's fees and the costs of the proceeding if (1) the debtor's student loan debt is discharged on the basis of undue hardship, and (2) the court finds that the creditor's position was not substantially justified.