Virginia residents who are burdened by overwhelming debt may seek relief by filing for bankruptcy, but student loans are generally not dischargeable under a Chapter 7 or Chapter 13 petition. However, that may soon change as a bill was introduced on May 9 that would eliminate the part of the bankruptcy code that makes federal and private student loan debt nondischargeable. The bicameral bill has bipartisan support.
Consumer advocacy groups including the National Consumer Law Center, Americans for Financial Reform, and the Center for Responsible Lending were quick to praise the legislative effort, but others said that the bill, while well-intentioned, would do more harm to students and taxpayers than good. A representative from the Consumer Bankers Association said that, if passed, the bill would lead to more student loans being discharged and higher interest rates on new loans.