Ranking Member Raskin’s Opening Statement at Subcommittee Hearing on Providing Affordable Relief for Small Businesses and Working Families
Washington, D.C. (July 15, 2025)—Today, Rep. Jamie Raskin, Ranking Member of the House Judiciary Committee, delivered opening remarks at the Subcommittee on the Administrative State, Regulatory Reform, and Antitrust hearing on why extending the debt limits for subchapter V and Chapter 13 bankruptcy is essential to providing access to timely, affordable relief for small businesses and working families.
Below are Ranking Member Raskin’s remarks, as prepared for delivery, at today’s hearing.
WATCH Ranking Member Raskin’s opening statement.
Ranking Member Jamie Raskin
Subcommittee on the Administrative State, Regulatory Reform, and Antitrust
Hearing on “Bankruptcy Law: Overview and Legislative Reforms”
July 15, 2025
Thank you, Mr. Chairman, for holding this bipartisan hearing. And thank you to our esteemed panel of witnesses, each of whom brings exceptional insight into one of the most consequential pillars of our commercial and civic life.
Too often, bankruptcy is spoken of in hushed tones or buried in the back pages of law journals. But bankruptcy is not a footnote to the American economy; at its core, it is a critical guardrail for the life and dignity of the American people. Even President Trump has repeatedly used the bankruptcy laws six times in Chapter 11 alone. It is where law meets hardship, and where financial distress is tempered by process and principle.
More than a simple mechanism for discharging debt, our bankruptcy system is a moral system. It affirms that failure should not be fatal, and that dignity should not surrender in the face of financial hardship. As Justice James McReynolds observed, its purpose is to “relieve the honest debtor from the weight of oppressive indebtedness, and permit him to start afresh.” At
the same time, the bankruptcy system must recognize the moral hazard of incentivizing bankruptcy and financial recklessness.
Although the Framers of our Constitution may not have lingered long over the Bankruptcy Clause during their debates in Philadelphia, they enshrined it for good reason. As James Madison put it in Federalist No. 42, the power to enact uniform bankruptcy laws “provide[s] 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.”
And today, Mr. Chairman, we do not call into question the expediency of a strong functioning bankruptcy system. What we do question is whether that system, as currently constituted, fulfills its democratic and economic promise. Does it reach the people it was designed to protect? Is it responsive to today’s credit-industrial complex, where profits are wrung from the pockets of working families?
Across this country, small businesses and working families are shouldering debts that would have once been considered extraordinary but today reflect the cost of staying afloat. Although it remains a remedy of last resort, our bankruptcy system must be equipped to provide relief when economic pressures strain 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. This hearing presents a chance to honestly assess the challenges to our bankruptcy system and advance solutions in a bipartisan way.
Take Subchapter V of the bankruptcy code—the streamlined bankruptcy process for small businesses to reorganize and restructure their debts. For five years, it offered small businesses a path back to viability by providing a simpler and more affordable pathway to restructure debt, save jobs, and continue serving our communities. Regrettably, that path is now narrowing—not because the policy failed but because, in June 2024, the debt limit set by Congress—the maximum debt small businesses can have and still be eligible for Subchapter V’s streamlined process—dropped by 60% from $7.5 million to $3 million.
Despite clear data and near-unanimous agreement among the bankruptcy bar that the $7.5 million debt limit was a resounding success for both small businesses and their creditors, reverting to the old debt limit excludes too many of the very small businesses Subchapter V was designed to support. Without a workable path to reorganize under Subchapter V, 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 employees, creditors, and entire communities.
I am heartened by the bipartisan agreement that restoring the $7.5 million debt limit for bankruptcy is both sensible and long overdue. This Committee should mark up the legislation and send it to the House floor.
And then there is the millions-strong class of student borrowers, whose debt resulting from student loans remains for decades beyond the end of their college education. 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 mythic standard of “undue hardship.” This vague, undefined standard has been interpreted by the courts and hardened over decades into a nearly insurmountable burden of proof, resulting in non-discharge for 99.9% of borrowers.
Among the most affected by burdensome student loan debt are seniors. As of 2024, nearly three-quarters of a million student borrowers are over the age of 71, collectively holding $28 billion in student debt. Many have spent decades in repayment, only to fall into default as interest compounds and balances balloon. Seniors now represent the fastest growing demographic of student borrowers and they face the highest rates of delinquency and 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 need to fix this. I hope my colleagues across the aisle will join us in restoring basic fairness to the bankruptcy system by purring student debt on the same footing as virtually every other kind of debt, all of which are dischargeable in bankruptcy.
But this is not the only place where the system strains under the weight of its own 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 Chapter 15, which is limited to international cases; or Subchapter V, which requires you to be a small business. Because of Chapter 13's expired debt limit, we risk pushing working people into Chapter 11—a process built for bankrupt multinational corporations, not working families. 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, 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 watchdogs of our bankruptcy system, are still doing critical work under a compensation structure that hasn’t been updated in over 30 years.
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 bankruptcy courts functioning. In Maryland, we’re on track to lose three out of seven temporary bankruptcy judgeships. That’s nearly half our bench. And it’s happening at the very moment filings are rising—up thirty percent in Maryland alone from 2022 to 2023.
This is the moment to reaffirm a foundational promise: that in the United States of America, financial hardship must never strip a person of their rights, their dignity, or their future. By my count, Congress has rewritten the Bankruptcy Code five times in the last two centuries before arriving at the modern framework. This is one of the most dynamic areas of our law, and there is no reason we cannot act now to refine it again. We have the facts. We have the tools. And we have bipartisan agreement on key fixes. The road ahead is clear.
Thank you, Mr. Chairman. I yield back.