Ranking Member Jamie Raskin delivers opening remarks

Mr. Chairman, thank you very much. Thanks for holding this bipartisan hearing and thanks to our esteemed witnesses uh who bring to us exceptional insight into one of the most consequential institutions of the American economy. Too often, bankruptcy is spoken of in hush tones or buried in the back pages of law journals, but it's not a footnote to the American economy. At its core, it's a critical guardrail for the life and dignity of the American people. Even President Trump has repeatedly used the bankruptcy laws six times uh in chapter 11 alone. This is where law meets uh hardship and where financial distress is tempered by both process and principle more than a simple mechanism for discharging debt. Our bankruptcy system uh has moral implications. It affirms that failure should not be fatal and that dignity should not surrender in the face of financial hardship and emergency. As Justice McReynolds observed, its purpose is to relieve the honest debtor from the weight of oppressive indebtedness and permit him to start a fresh. At the same time, the bankruptcy system must recognize the moral hazard of incentivizing bankruptcy and financial recklessness. Although the framers of the Constitution may not have lingered long over the bankruptcy clause during their debates in Philadelphia, they enshrined it for good reason. And as Madison said in Federalist 42, the power to enact uniform bankruptcy laws, quote, provides for the harmony and proper intercourse among the states. It is so intimately connected with the regulation of commerce and will prevent so many frauds that the expediency of it seems not likely to be drawn into question today. Mr. Chairman, we do not call into question the expediency of a strong bankruptcy system. What we do question is whether that system is currently constituted, fulfills its democratic and economic promise. Does it reach the people it was designed to protect? Is it responsive to the existence and power of today's credit industrial complex where profits are systematically rung from the pockets of working families? Across the country, small businesses and working families are shouldering debts that would have once been considered extraordinary but today reflect the mere cost of staying afloat. Although it remains a remedy of last resort, our bankruptcy system must be equipped to provide relief when economic pressures collapse the margins of household and commercial stability. A well-calibrated system does not punish misfortune or entrench failure. It provides a lawful path forward when all else fails. The hearing presents a chance to honestly assess the challenges to our bankruptcy system and advance solutions in a bipartisan way. Take subchapter 5 of the bankruptcy code. the streamlined bankruptcy process for small businesses to reorganize and restructure. For five years, it offered small businesses a path back to viability by providing a simpler pathway to restructure debt, save jobs, and continue serving in the community. Regrettably, that path is now narrowing. Not because the policy failed, but because of because in June of last year, the debt limit set by Congress, the maximum debt small businesses can have and still be eligible for subchapter 5's process lapsed and dropped by 60% from 7.5 million to 3 million. Despite data in near unanimous agreement among the bankruptcy bar that the $7.5 million debt limit was a success for both small businesses and their creditors, reverting to the old debt limit excludes way too many of the very small businesses sub chapter 5 was designed to support. Without a workable path to reorganize under sub chapter 5, all that remains of these businesses is used equipment and unpaid bills. This tremendous loss in value is lost not only for business owners, but also for their employees, creditors, and entire communities. I'm heartened by the bipartisan agreement that restoring the $7.5 million debt limit is both sensible and long overdue. The committee should mark up this legislation and send it to the House floor quickly. And then there is the million strong class of student borrowers whose staggering debt resulting from student loans lingers stubbornly for decades beyond the end of their college education preventing investment in home mortgages or small businesses. Student loan debt is the only type of consumer debt not dischargeable under bankruptcy and this was only made so in 1976. Although our bankruptcy system was built with robust safeguards, judicial oversight and in some cases stringent means testing, it effectively treats all student borrowers as presumptive abusers unless proven otherwise through an almost mythical standard of undue hardship. This vague and undefined standard has been interpreted by the courts and hardened over decades into a nearly insurmountable burden of proof resulting in non-discharge for greater than 99% of borrowers. Among the most affected are seniors. As of 2024, nearly three4ers of a million student borrowers are remarkably over the age of 71, collectively holding 28 billion dollar in student debt. Many have spent decades in repayment only to fall into default as interest compounds and the balances balloon. Seniors now represent the fastest growing demographic of student borrowers and they face the highest rates of delinquency and therefore default. And for many of those older Americans who live on a fixed income, the consequences are severe. Garnished social security checks, skipped medications, and postponed retirements. We've got to fix this. I hope my colleagues will join us in restoring basic fairness to the bankruptcy system by putting student debt on the same footing as virtually every other kind of debt, all of which are dischargeable. But this is not the only place where the system strains under the weight of its design. Families who exceed the chapter 13 debt limit are legally barred from filing under that chapter, no matter how regular their income or sincere their repayment intentions. Nor can they turn to chapter 12, which is limited to farmers and fishermen, or 15, which is limited to international cases, or subchapter 5, which requires you to be a small business. Because of 13's expired debt limit, we risk pushing working people into chapter 11. It's a system that was never meant for someone trying to save their home while paying down medical bills and putting kids through school. And Chapter 7, finally, which should offer the most straightforward form of relief, is weighed down by barriers of its own. Debtors often have to pay their lawyers upfront, even when they can't pay their rent, locking many people out of even applying for bankruptcy relief. and our chapter 7 trustees. The watchd dogss of our system are still doing critical work under a compensation structure that's not been updated in more than three decades. None of this is new and none of it is unfixable. We have bipartisan legislation, the bankruptcy administration improvement act ready to go that would raise trustee pay and extend the temporary judgeships that keep our courts functioning. In Maryland, we're on track to lose three out of seven temporary bankruptcy judges. That's nearly half our bench and it's happening at the very moment filings are rising. This is the moment to reaffirm a founding promise that in the US financial hardship must never strip a person of their rights, their dignity, or their future. By my account, Congress has rewritten the code five times in the last two centuries before arriving at the current framework. This is one of the most dynamic areas of our law, and there's no reason we should not act now again to refine it and improve it. We've got the facts and the tools. We have bipartisan agreement on the principal fixes. The road head the road ahead is clear for us. Thank you, Mr. Chairman.