America has over $100 trillion in combined personal, household, small business, corporate, and government debt and liabilities that cannot possibly be repaid in full. We already have the right tools to restructure corporate and municipal debts, but Congress must provide the right tool for ordinary Americans as well.

With nearly 43 million Americans owing roughly $1.9 trillion in student debt alone — plus $1.25 trillion in total credit card debt and over $220 billion in medical debt affecting tens of millions of families — this crisis is already severe. Projections show 8 to 13 million student loan borrowers could soon be in default, while credit card delinquencies have reached levels not seen in over 15 years. We must address the crushing burden of student loans, credit card debt, and medical debt that is holding back an entire generation from starting families, buying homes, and building wealth.

And with AI-driven job displacement accelerating, millions of workers — including many with expensive degrees in fields that AI is rapidly automating or devaluing — will face even greater challenges repaying their student loans and other personal debts.

In 2005, Congress made a major mistake by making it nearly impossible to discharge private student loans, credit card debt, and many medical debts in bankruptcy. My plan rolls back those changes and restores the pre-2005 bankruptcy protections, giving Americans a true fresh start when debt becomes unmanageable.

This targeted reform will reduce long-term financial distress, free up consumer spending, encourage responsible lending practices, and help young people — and working families — get a fair shot at the American Dream, without taxpayer-funded bailouts or punishing those who have already paid their debts responsibly.

FAQs

Isn't bankruptcy bad and to be avoided at all costs?

No one wants to file for bankruptcy — it’s a difficult and serious step. But our Founders understood it is essential for a dynamic economy. That’s why they explicitly gave Congress the power to establish uniform bankruptcy laws in Article I, Section 8 of the Constitution. The goal was simple: give honest but unfortunate Americans a genuine fresh start instead of lifelong debt bondage.

Bankruptcy has been used successfully by many prominent Americans. Sam Walton, the founder of Walmart, filed for bankruptcy early in his career. Harry Truman’s haberdashery business went bankrupt before he became President. And Donald Trump used Chapter 11 bankruptcy protections for several of his businesses. These examples show that bankruptcy isn’t the end — it’s a tool for renewal.

My plan restores that constitutional principle for student loans, credit card debt, and medical debt — so hardworking families can get back on their feet and contribute again, rather than being trapped by unpayable burdens.

Doesn't this create a moral hazard? Won't people load up on student loans or credit card debt and then file for bankruptcy?

That’s a fair concern, but the evidence shows moral hazard is limited when the system is balanced. Borrowers who recklessly load up on debt would still face serious consequences — damaged credit, loss of future borrowing power, and the public stigma of bankruptcy. At the same time, lenders must bear their fair share of responsibility. These were not free loans — they came with high interest rates precisely because of the risk involved. My reform encourages lenders to tighten underwriting standards and price risk more responsibly instead of pushing expensive debt onto people who can’t sustain it.



Importantly, restoring real bankruptcy options also creates a strong incentive for both sides to negotiate reasonable workouts before bankruptcy becomes necessary. The credible threat of discharge often leads to better compromises, not more abuse.

How much  could be forgiven or restructured?

In my view, unsecured debts that exceed 25% of annual income are generally not sustainable. For example, if you earn $60,000 per year, any unsecured debt above $15,000 becomes extremely difficult to manage responsibly.

My plan would allow these unsustainable debts — such as student loans, credit cards, and medical bills — to be discharged in bankruptcy or settled on favorable terms through the credible threat of bankruptcy, giving borrowers and responsible lenders a practical path forward.

What about secured debts like car loans, home mortgages, etc. ?

If a borrower defaults on a secured loan (such as a mortgage or auto loan), the lender has the right to seize the collateral — like a home or car — but any value in excess of the debt must be returned to the borrower.

My reform focuses instead on unsecured debts like student loans, credit card balances, and medical debt, where there is no collateral to seize. These are the debts that are currently hardest to discharge and that most severely trap working families and young people in long-term financial distress.

Will this apply to federal student loans or only private ones?

My plan would apply to both federal and private student loans.

It rolls back the restrictive changes made in 2005 and restores the more balanced bankruptcy rules that existed for decades prior. Under the pre-2005 standard, Americans could more realistically seek relief in bankruptcy court when student debt, credit card debt, or medical debt became genuinely unmanageable.

This is not automatic forgiveness — borrowers would still have to go through the bankruptcy process and satisfy the court — but it gives people a real opportunity for a fresh start instead of lifelong debt servitude.

What about people who already paid off their debts responsibly — is this fair to them?

That’s a very fair and important question. People who worked hard, sacrificed, and paid off their debts responsibly deserve respect — and this plan honors that.

Fairness cuts both ways. The current system traps millions in debt that has become objectively unpayable due to high interest, job loss, medical events, or AI-driven economic changes. Keeping people in permanent debt servitude doesn’t punish the responsible — it just creates more economic drag for everyone.

This reform doesn’t erase anyone’s past payments or reward reckless behavior. It simply restores a safety valve that existed for most of American history: the ability to get a fresh start when debt becomes unsustainable. Those who already paid off their loans did the right thing under the old rules. Now we’re fixing a broken system so future generations aren’t crushed by debts that no reasonable person could have foreseen would become this burdensome.

Responsible Americans benefit when the overall economy is healthier — when young people can buy homes, start businesses, and raise families instead of being saddled with decades of unpayable debt.



This is about restoring opportunity and economic mobility, not punishing those who succeeded despite the system.

Still have a question?