The CFPB has issued a new bulletin (2023-01) titled “Unfair Billing and Collection Practices After Bankruptcy Discharges of Certain Student Loan Debts.” The bulletin warns servicers that they risk engaging in a UDAAP violation by resuming collection of student loans that were discharged through the regular course of a borrower’s bankruptcy.… Continue Reading
bankruptcy
Justice Department announces new guidance for handling bankruptcy discharge of federal student loans
In conjunction with efforts to forgive federal student debt for certain borrowers, President Biden’s Justice Department recently announced new guidance for its attorneys to use when deciding whether to recommend that a bankruptcy judge discharge an individual’s federal student loans.
The guidance seeks to streamline the process of discharging federal student debt which, unlike other consumer debt, is not automatically discharged through bankruptcy. … Continue Reading
CFPB blog post and report focus on student loan servicing
Student loan servicing was the focus of recent CFPB attention in the form of a blog post, “Busting myths about bankruptcy and private student loans,” and a report (labeled a “special issue brief”) titled “Student Loan Borrowers Potentially At-Risk when Payment Suspension Ends.” Both items raise areas of compliance risk for student loan servicers.… Continue Reading
Bankruptcy Court Discharges Student Loan Debt
On January 7, 2020, Chief United States Bankruptcy Judge Cecilia G. Morris of the United States Bankruptcy Court for the Southern District of New York issued a notable opinion in the case of Rosenberg v. N.Y. State Higher Education Services Corp., granting summary judgment in favor of a U.S. Navy veteran who was seeking to discharge $221,385.49 in federal student loan debt.… Continue Reading
CFPB finalizes amendments to timing requirements for bankruptcy periodic statements
The CFPB recently issued its final rule amending the timing requirements for transitioning between unmodified periodic statements and modified statements for consumers in bankruptcy. Initially proposed on October 4, 2017, the CFPB finalized the amendments without further revision. These changes will go into effect on April 19, 2018, along with the other servicing rule amendments adopted in 2016 that require sending periodic statements to consumers in bankruptcy. … Continue Reading
Education Dept. seeks comment on factors used to evaluate student loan discharge claims in bankruptcy cases
The Department of Education has published a request for information in today’s Federal Register seeking comment on the factors used to evaluate claims of undue hardship made by student loan borrowers attempting to discharge student loans through adversary proceedings in bankruptcy court. Responses to the RFI must be received by May 22, 2018.… Continue Reading
CFPB files SCOTUS amicus brief in FDCPA case on filing bankruptcy proof of claim on time-barred debt
The CFPB has filed an amicus brief in the U.S. Supreme Court in support of the respondent/consumer in Midland Funding, LLC v. Aleida Johnson, a decision of the Eleventh Circuit that held Midland’s alleged filing of an accurate proof of claim in the consumer’s bankruptcy case on a time-barred debt violated the FDCPA.… Continue Reading