Warren Has a Plan for … Making Bankruptcy More Sweeping

The Story:

Senator Warren has made the phrase “I’ve got a plan for that” part of her campaign persona as she runs for President. It fits her slightly wonkish presentation. One of the latest examples of a detailed policy plan from the Warren campaign concerns the availability and sweep of personal bankruptcy.

The Plan: 

Warren, once a professor of law at Harvard, made her reputation there as a scholar of bankruptcy law.

In 2005, in that capacity, she argued against a bankruptcy law change that she thought was too tilted in the favor of creditors. She now says, “I lost that fight in 2005, and working families paid the price.”

She complains in particular about the banking industry’s lobbying expenditures in that fight. The banks “spent more than $100 million to turn that bill into a law.”

The Thing to Know: 

Perhaps the most politically salient difference between the Warren plan and existing US bankruptcy law concerns student debt (the issue of financing higher education, more broadly, is becoming a Big Issue.) Existing law holds that the obligation of student loans can not be discharged by the bankruptcy courts except in extraordinary circumstances. Warren’s plan would put student debt on a par with other consumer debts in dischargeability.

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