Sec. 601. Protections in the event of death or bankruptcy
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Section 140 of the Truth in Lending Act ( 15 U.S.C. 1650 ) is amended— in subsection (a)— by redesignating paragraphs
(1)through
(8)as paragraphs
(2)through (9), respectively; and by inserting before paragraph (2), as so redesignated, the following: the term cosigner — means any individual who is liable for the obligation of another without compensation, regardless of how designated in the contract or instrument with respect to that obligation, other than an obligation under a private education loan extended to consolidate a consumer’s pre-existing private education loans; includes any person the signature of which is requested as condition to grant credit or to forbear on collection; and does not include a spouse of an individual described in subparagraph (A), the signature of whom is needed to perfect the security interest in a loan. ; and by adding at the end the following: With respect to a private education loan involving a student obligor and 1 or more cosigners, the creditor shall not declare a default or accelerate the debt against the student obligor on the sole basis of a bankruptcy or death of a cosigner. The holder of a private education loan, when notified of the death of a student obligor, shall release within a reasonable timeframe any cosigner from the obligations of the cosigner under the private education loan. A holder or servicer of a private education loan, as applicable, shall within a reasonable time-frame notify any cosigners for the private education loan if a cosigner is released from the obligations of the cosigner for the private education loan under this paragraph. Any lender that extends a private education loan shall provide the student obligor an option to designate an individual to have the legal authority to act on behalf of the student obligor with respect to the private education loan in the event of the death of the student obligor. . The amendments made by subsection
(a)shall only apply to private education loan agreements entered into on or after the date that is 180 days after the date of enactment of this Act.
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Sec. 601
Protections in the event of death or bankruptcy
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