Sec. 601. PROTECTIONS IN THE EVENT OF DEATH OR BANKRUPTCY
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## SEC. 601 PROTECTIONS IN THE EVENT OF DEATH OR BANKRUPTCY ###
(a)In General Section 140 of the Truth in Lending Act (15 U.S.C. 1650) is amended— ####
(1)in subsection (a)— #####
(A)by redesignating paragraphs
(1)through
(8)as paragraphs
(2)through (9), respectively; and #####
(B)by inserting before paragraph (2), as so redesignated, the following: > > #### “(1) > > the term ‘cosigner’— > > > ##### “(A) > > 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; > > > ##### “(B) > > includes any person the signature of which is requested as condition to grant credit or to forbear on collection; and > > > ##### “(C) > > 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 ####
(2)by adding at the end the following: > > ### “(g) Additional Protections Relating to Borrower or Cosigner of a Private Education Loan > > > #### “(1) Prohibition on automatic default in case of death or bankruptcy of non-student obligor > > 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. > > > #### “(2) Cosigner release in case of death of borrower > > > ##### “(A) Release of 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. > > > ##### “(B) Notification of release > > 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. > > > ##### “(C) Designation of individual to act on behalf of the borrower > > 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.” > . ###
(b)Applicability **[**[15 U.S.C. 1650 note](/us/usc/t15/s1650)**]** 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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