Sec. 301. Limits on seizing income for debt relating to direct loans
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Part D of title IV ( 20 U.S.C. 1087a et seq.) is amended by adding at the end the following: In this section— the term adjusted gross income has the meaning given the term in section 62 of the Internal Revenue Code of 1986; and the term poverty line means the poverty line (as defined by the Office of Management and Budget and revised annually in accordance with section 673(2) of the Community Services Block Grant Act ( 42 U.S.C. 9902(2) ) applicable to a family of the size involved.
Notwithstanding any other provision of law, any entity engaged in the collection of debts relating to loans made under this title may not take any action to cause, or seek to cause, the collection of such a debt that is taken from the wages, Federal benefits, or other amounts due to a borrower through garnishment, deduction, offset, or seizure in an amount on a monthly basis that is more than the amount described in paragraph (2). The amount described in this paragraph is the amount obtained by calculating what the monthly repayment amount would be for loans made under this title, with respect to the borrower, under the income-based repayment plan under section 493C(c).
For purposes of this section, if an entity described in paragraph
(1)is unable to determine the family size of a borrower after taking reasonable steps to collect the information necessary to do so, that person shall presume that the family size of the borrower is 1 individual. Any communication by an entity described in subsection (b)(1) that is for the purpose of seizing income of a consumer for debt that relates to a loan made under this title shall— be considered— an attempt to collect a debt; and conduct in connection with the collection of a debt for the purposes of this title; and contain a notice to the borrower that, consistent with the procedures for rehabilitating a loan pursuant to section 428F(a) or consolidating loans out of default as described in section 428C(a)(3)(B)(i)(V), the borrower may exit default and reenter current repayment status (as defined in section 428(l)(2)(C)) with a similar monthly payment amount on an income-based repayment plan under section 493C(c) and thereby obtain the full flexibility and benefits of such status, including the ability to adjust family size and make qualifying payments for purposes of repayment or cancellation of any outstanding balance of principal and interest due on a loan (as described in section 493C(b)(7)). The Secretary may impose a civil penalty on an entity for a violation of this section not to exceed $5,000 for each day during which such violation continues. Notwithstanding paragraph (1), the Secretary may impose a civil penalty on an entity that recklessly engages in a violation of this section not to exceed $25,000 for each day during which such violation continues. Notwithstanding paragraphs
(1)and (2), the Secretary may impose a civil penalty on an entity that knowingly violates this section not to exceed $1,000,000 for each day during which such violation continues. Nothing in this subsection shall be construed as authorizing the imposition of exemplary or punitive damages. .
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