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On January 4, the Consumer Financial Protection Bureau (CFPB) and New York Attorney General (NY AG) filed a joint complaint in the U.S. District Court for the Southern District of New York against Credit Acceptance Corporation (Credit Acceptance), a major subprime indirect auto finance company. On March 14, Credit Acceptance filed a motion to dismiss the complaint, and on March 21, Troutman Pepper filed an amicus curiae brief in support of Credit Acceptance on behalf of the American Financial Services Association, the Consumer Bankers Association, and the Chamber of Commerce of the United States.

Among other things, the complaint asserts that Credit Acceptance engaged in deceptive and abusive practices in financing used automobile sales predominantly to subprime consumers by allegedly: (1) allowing and incentivizing dealers to sell vehicles at inflated cash prices that incorporated “hidden finance charges”; (2) financing sales to consumers without considering whether they have the ability to repay the credit they receive; and (3) allowing and incentivizing dealers to engage in deceptive practices in connection with the sale of add-on products.

As a threshold argument, the motion to dismiss challenges, under the appropriations clause of the U.S. Constitution, the CFPB’s right to use unappropriated funds to bring a lawsuit against Credit Acceptance. This issue is currently pending before the Supreme Court.

The motion to dismiss further argues that the complaint fails to state a valid claim as a matter of law for several reasons, including some of the key arguments highlighted below.

As to the complaint’s “hidden finance charge” claims, the motion to dismiss observes:

(1) The complaint fails to allege that Credit Acceptance deceived any consumers regarding alleged “hidden finance charges.” Indeed, the motion to dismiss explains that consumers receive credit under retail installment contracts with the motor vehicle dealers and that Credit Acceptance has no contact with vehicle purchasers until after the credit agreements are executed and assigned to the company by the dealer.

(2) The complaint does not allege a single instance where a dealer charged a consumer a higher “cash price” on a financed sale because the consumer financed the purchase, as is required to state a claim related to “hidden finance charges.” Rather than comparing the actual prices paid by the consumers at issue to those offered to cash buyers, the complaint alleges that the prices paid by consumers contained a “hidden finance charge” merely because they exceeded a hypothetical “cash price proxy” created by the plaintiffs for the purposes of the litigation. The upshot of the plaintiffs’ theory — which is based on how much a dealer was paid by the finance company — is that every contract contains a “hidden finance charge” any time a finance company accepts assignment of a contract at a “discount.” The Second Circuit has rejected similar pleading tactics in the past, and the CFPB’s official interpretation of the governing disclosure regulations is clear that assignment discounts are not finance charges unless separately imposed on consumers in individual transactions — a test the complaint’s “cash price proxy” theory does not satisfy.

(3) Assignees of consumer credit contracts are only liable under the Truth in Lending Act for violations that are apparent on the face of the TILA disclosure statement and other assigned documents, whereas alleged hidden finance charges, by definition, cannot meet this test.

As to the complaint’s ability-to-repay claims, the motion to dismiss notes that (1) the financed contracts in question clearly state the consumers’ payment obligations, (2) the vehicle purchasers are in a better position than Credit Acceptance to assess their specific financial situations and income stability, and (3) the consumer purchasers are able to consult publicly available information concerning car values and to compare prices available from competitors of the dealers. Credit Acceptance also points out that ability-to-repay requirements should not be imposed ad hoc through private litigation against a single company given there is no express statutory authorization for ability-to-pay mandates in the auto finance context (as opposed to mortgages or credit cards), and the plaintiffs did not engage in the appropriate (and transparent) notice-and-comment rulemaking process.

Lastly, in response to the complaint’s claims concerning add-on products, the motion to dismiss argues that Credit Acceptance cannot be held liable for aiding and abetting alleged dealer deceptive practices when dealers face no primary liability under the Dodd-Frank Act, and that the complaint improperly relies on an analysis of a few post-origination consumer complaints to suggest that Credit Acceptance acted knowingly or recklessly at origination (prior to accepting assignment of a contract).

We believe that the motion to dismiss articulates powerful arguments in opposition to the complaint, which we amplified in the amicus curiae brief we filed in support of the motion to dismiss. Our amicus brief explains that the complaint’s efforts to modify, through litigation, settled law that industry participants have relied on for decades is part of a longstanding CFPB pattern of regulatory overreach — “pushing the envelope,” in the words of the CFPB’s first director.

We argue:

(1) The complaint represents an end-run around the Dodd-Frank Act’s express exclusion of automobile dealerships from the CFPB’s rulemaking, enforcement, and supervisory authority.

(2) The complaint seeks to upend longstanding rules governing consumer credit disclosures, including those concerning the content of the required disclosures and the person responsible for providing them and ensuring their accuracy.

(3) The complaint attempts to circumvent express limitations on disclosure-related liability for assignees of consumer credit contracts.

(4) The complaint attempts to implement a major policy decision — the imposition of ability-to-repay requirements in the auto finance space — without an express statutory authorization (like those that exist in the mortgage and credit card contexts) or compliance with the m rulemaking channels for implementing such policy decisions.

The amicus brief further argues that the inevitable consequence of the plaintiffs’ actions in this case, if permitted to continue by the courts, would be a lack of transparency, the failure to gather necessary data and input from key industry stakeholders, and the potential for significant unintended consequences, including decreased competition in the auto finance space, higher financing costs, and a diminished availability of credit to entire categories of consumers. And, if permitted to proceed past the pleadings stage, the government’s theories could have widespread chilling effects in the auto finance industry and beyond.

We look forward to further developments in this case. Ultimately, of course, we hope to report on the vindication of Credit Acceptance and the court’s rejection of the complaint.

Today, the Consumer Financial Protection Bureau (CFPB or Bureau) issued a policy statement purporting to summarize, in clear and simple terms, the meaning of the statutory prohibition on abusive conduct. Policy statements are intended to provide background information about laws under the CFPB’s jurisdiction and articulate how the CFPB will enforce those laws, but are not meant to impose new legal requirements. This policy statement appears to replace the 2020 policy statement created by former CFPB Director Kathy Kraninger that the Bureau rescinded in March 2021 after President Biden took office.

In 2010, Congress passed the Consumer Financial Protection Act (CFPA) that banned an “unfair, deceptive, or abusive act or practice.” The CFPA defines an act or practice as “abusive” where the act or practice:

(1) materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service; or

(2) takes unreasonable advantage of —

(A) a lack of understanding on the part of the consumer of the material risks, costs, or conditions of the product or service;

(B) the inability of the consumer to protect the interests of the consumer in selecting or using a consumer financial product or service; or

(C) the reasonable reliance by the consumer on a covered person to act in the interests of the consumer.

In its policy statement, the CFPB summarizes the above “at a high level” as (1) obscuring important features of a product or service; or (2) leveraging certain inequalities to take advantage of the consumer, including gaps in understanding, unequal bargaining power, and consumer reliance. According to the CFPB, the conduct that underlies an abusiveness determination may also be found to be “unfair” or “deceptive,” depending on the circumstances.

“Obscuring important features of a product or service”

  • Material interference can be shown when an act or omission is intended to impede consumers’ ability to understand terms or conditions.
  • According to the CFPB, interference can take numerous forms, such as buried disclosures, physical or digital interference, overshadowing, and various other means of manipulating consumers’ understanding.
    • Buried disclosures include the use of fine print, complex language, jargon, or the timing of the disclosure.
    • Physical interference can include physically hiding or withholding notices.
    • Digital interference can include the use of pop-up or drop-down boxes, multiple click-throughs, or other actions or so-called “dark patterns” that have the effect of making the terms and conditions materially less accessible.
    • Overshadowing includes the prominent placement of certain content that interferes with the comprehension of the terms and conditions.
  • According to the CFPB, material interference can be established with evidence that the natural consequence would be to impede a consumers’ ability to understand or with evidence that the act or omission did impede a consumers’ actual understanding. Intent is not required.

“Taking advantage of the consumer”

  • According to the CFPB, entities may not take advantage of gaps in understanding regarding the material risks, costs, or conditions of the entity’s product or service.
    • A lack of understanding can be shown by direct evidence of lack of understanding, including complaints and consumer testimony. It can also be shown by evidence that reasonable consumers were not likely to understand. For example, according to the CFPB, if a transaction would entail material risks or costs and people would likely derive minimal benefit from the transaction, it is reasonable to infer that people who went ahead with the transaction did not understand those risks or costs.
  • According to the CFPB, entities cannot take unreasonable advantage of circumstances where people lack sufficient bargaining power to protect their interests.
    • The policy statement describes such circumstances as when consumers do not elect to enter into a relationship with an entity, such as with consumer reporting companies, debt collectors, and third-party loan servicers.
    • Other examples provided of unreasonable advantage include, entities using form contracts, entities with outsized market share, or when consumers face high transaction costs to exit a relationship with an entity.
    • The CFPB clarified that such relationships and circumstances are not per se abusive, but entities may not take unreasonable advantage of the absence of choice in these types of relationships.

“Consumer reliance”

  • According to the CFPB, where people reasonably expect that a covered entity will make decisions or provide advice in the person’s interest, there is potential for betrayal or exploitation of the person’s trust.
    • An example provided in the policy statement is where an entity assumes the role of helping consumers select providers in the market.

The policy statement has been published in the Federal Register. Interested parties may submit comments until July 3, 2023.

Troutman Pepper’s Consumer Financial Services team will be issuing further analysis of this policy statement through its podcast in the coming weeks, but we believe it is fair to say, as an initial matter, that the Bureau has defined “abusive” in a very broad way that is intended to give the agency the greatest flexibility and latitude to find “abusive” practices.

As promised (and discussed here), the Consumer Financial Protection Bureau (CFPB) issued its final rule under Section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Final Rule). Section 1071 amended the Equal Credit Opportunity Act (ECOA) to impose significant data collection requirements on small business creditors. According to the press release announcing the Final Rule’s issuance, “[l]enders will collect and report information about the small business credit applications they receive, including geographic and demographic data, lending decisions, and the price of credit.” Continue Reading It’s Here: CFPB Issues Final Rule Under Section 1071

Please join Troutman Pepper Partner Chris Willis for a solo episode as he discusses new trends in CFPB information gathering, specifically Dodd-Frank Act Section 1022 found in the rulemaking and market monitoring section of the CFPB’s authority. Here, Chris examines how the CFPB can request and require certain information from market participants, noting the significant increase in recent CFPB Section 1022 requests, while also discussing industry implications of this emerging trend.

Continue Reading New Trends in How the CFPB Gathers Information

As discussed here, on December 7, the Consumer Financial Protection Bureau (CFPB or Bureau) made a preliminary conclusion that New York’s Commercial Financing Law (the New York law) was not preempted by the Truth in Lending Act (TILA), and was also considering whether to make a preemption determination regarding similar state laws in California, Utah, and Virginia. Today, the CFPB announced that it has determined there is no conflict between the state laws and TILA because the state laws extend disclosure protections to businesses and entrepreneurs that seek commercial financing rather than to consumer purpose transactions. In doing so, the CFPB expressly adopted a narrow view of the scope of TILA preemption of state laws.

As the Bureau stated in the press release announcing the decision, “[s]tates have broad authority to establish their own protections for their residents, both within and outside the scope of the [TILA]. The [TILA] only preempts state laws under what is known as conflict preemption. The state laws reviewed by the CFPB concern protections for businesses to ensure they can understand the credit terms available to them. This is beyond the scope of the [TILA’s] statutory consumer credit purposes. The CFPB’s decision affirms that the four states’ commercial financing disclosure laws do not conflict with the [TILA].”

The CFPB’s decision was prompted by a request from a business trade association asking it to determine that TILA preempts certain provisions in the New York law. Like TILA, the New York law requires rate and cost disclosures for certain covered transactions, however, the New York law applies to multiple types of commercial financing products instead of consumer credit. It requires providers to issue disclosures when “extending a specific offer” for various types of commercial financing. The request asserted that TILA preempts the New York law with respect to its use of the terms “finance charge” and “annual percentage rate” (APR), notwithstanding that the statutes govern different categories of transactions. The request focused on what it alleged are material differences between how the New York law and federal law use the terms “finance charge” and “APR,” and alleged that these differences made the New York law inconsistent with federal law for purposes of preemption.

The CFPB’s preliminary determination was that TILA did not preempt the New York law because the statutes govern different transactions. TILA requires creditors to disclose the finance charge and APR only for “consumer credit” transactions, whereas the New York law requires the disclosures only for “commercial financing.” Second, the CFPB disagreed that the New York law significantly impeded the operation of TILA or with the purposes of the federal scheme. On its own initiative, the CFPB announced that it was considering making a similar determination regarding state laws in California, Utah, and Virginia that prescribe similar disclosures in certain commercial transactions.

The CFPB reached its decision after analyzing 15 comments on its preliminary determination, including one from the Attorney General of California discussed here. In the end, the CFPB determined that Congress adopted a narrow standard for TILA preemption that displaces state law only in the case of inconsistency. “As relevant here, commercial financing transactions to businesses —and any disclosures associated with such transactions — are beyond the scope of TILA’s statutory purposes, which concern consumer credit.”

Yesterday, a three-judge panel of the Second Circuit Court of Appeals issued a unanimous opinion declining to follow the Fifth Circuit’s decision in Community Financial Services Association of America, Ltd. v. Consumer Financial Protection Bureau (CFPB or Bureau) finding no “support for the Fifth Circuit’s conclusion” that the CFPB’s funding structure is unconstitutional in Supreme Court precedent.

In CFPB v. Law Offices of Crystal Moroney, P.C., the Bureau initially served a civil investigative demand (CID) on a law firm specializing in debt collection in 2017. While the Bureau’s petition to enforce the CID was pending in a district court, the Supreme Court issued its opinion in Seila Law LLC v. CFPB, holding that the provision that protected the Director of the CFPB from removal was unconstitutional. Concerned about the validity of its enforcement action, the CFPB filed a notice to ratify the CID, which the district court granted. The law firm appealed arguing, among other things, the CID is not enforceable because the funding structure of the CFPB violates the Appropriations Clause. The court of appeals rejected this argument and affirmed the district court’s order.

In analyzing the law firm’s argument, the court of appeals found that because “the CFPB’s funding structure was authorized by Congress and bound by specific statutory provisions,” it does not offend the Appropriations Clause. Specifically, in enacting the Consumer Financial Protection Act (CFPA) Congress provided that funds obtained by the CFPB shall remain available until expended to pay the expenses of the CFPB. Congress also limited the amount of funding the CFPB can draw from the Federal Reserve System to 12% of the Federal Reserve System’s 2009 Operating Expenses. To receive additional funding, the CFPB must seek approval through the annual Congressional appropriations process.

The Second Circuit did not find the Fifth Circuit’s contrary reasoning persuasive. The Fifth Circuit concluded that Congress ceded direct control over the CFPB’s budget by insulating it from annual appropriations and ceded indirect control by providing that the funding be drawn from a source that is itself outside the appropriations process, namely, the Federal Reserve System. According to the Fifth Circuit, this constitutes “a double insulation from Congress’s purse strings,” which runs “afoul of the separation of powers embodied in the Appropriations Clause.” The Second Circuit disagreed for several reasons.

First, the Second Circuit found no support in Supreme Court precedent. “[T]he Court has consistently interpreted the Appropriations Clause to mean simply that ‘the payment of money from the Treasury must be authorized by a statute.'” Here, the court found that Congress expressly appropriated the CFPB’s funding by enacting the CFPA.

Second, the court found no support in constitutional text. “The Appropriations Clause states that ‘[n]o Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.’ Nothing in the Constitution, however, requires that agency appropriations be ‘time limited’ or that appropriated funds be drawn from a particular ‘source.'”

Lastly, the Second Circuit found no support in the history of the Appropriations Clause. “Consistent with the historical practices of English, colonial, and state governments that formed the basis of the Founders’ understanding of the appropriations process at the time of the Constitution’s enactment, Congress specified ‘the purpose, the limit, and the fund’ of its appropriation for the CFPB in ‘a previous law.'”

The Second Circuit also rejected the law firm’s other three bases for appeal finding the CID was not void ab initio because the CFPB Director was validly appointed, that the CFPB’s funding structure is not constitutionally infirm under the nondelegation doctrine, and that the CID served on the law firm is not an unduly burdensome administrative subpoena.

As discussed here, on February 27, 2023, the U.S. Supreme Court granted the CFPB’s petition for certiorari on the Appropriations Clause issue in Community Financial Services Association of America, Ltd. v. CFPB. Because the Court declined to hear the case on an expedited basis, a decision is not expected until next term. The split in circuit authority makes the need for a dispositive ruling on the issue even more compelling.

In an agency order issued on February 27, the Consumer Financial Protection Bureau (CFPB) permanently banned RMK Financial Corporation from the mortgage lending industry. In addition to imposing a penalty of $1,000,000, the order prohibits the lender from engaging in any mortgage lending activities or receiving remuneration from mortgage lending.

The CFPB based its decision on findings that the lender sent millions of mortgage advertisements to military families that made deceptive representations or contained inadequate or impermissible disclosures. Specifically, the advertisements falsely represented that the lender was, or was affiliated with, the U.S. Department of Veterans Affairs (VA) or the Federal Housing Administration (FHA), and that the advertised loans were provided by the VA or FHA. This included the use of fake VA seals, the FHA logo, and language implying that the lender was affiliated with the government. The CFPB further found that the advertisements deceived borrowers about the interest rates available and misrepresented the projected savings from refinancing.

The CFPB’s action was not based on a one-time offense. Previously, in 2015, the CFPB imposed a penalty of $250,000 and ordered the lender to stop issuing advertisements that led consumers to believe that the company was affiliated with the U.S. government. The company’s refusal to comply with the 2015 order resulted in more severe action being taken. As CFPB Director Rohit Chopra explained:

Even after the 2015 law enforcement order, RMK continued to lie to military families by falsely implying government endorsement of its home loans. Our action reflects our commitment to weed out repeat offenders, and we are shutting down this outfit for good.

The CFPB’s order demonstrates its commitment to eliminating deceptive advertising practices in the mortgage lending industry. The result is a positive for the many honest lenders in the market who should not have to compete with entities that refuse to play by the rules.

A federal magistrate judge in Rhode Island has ruled that the Consumer Financial Protection Bureau (CFPB or Bureau) must produce three employees for depositions, denying the agency’s motion for a protective order.

The lawsuit brought by the Bureau in 2020 alleges that Citizens Bank (Citizens) failed to reasonably investigate consumers’ claims of unauthorized credit card use and failed to issue proper credits when such unauthorized card use had occurred. The complaint alleges violations of the Truth in Lending Act and the Consumer Financial Protection Act of 2010. The Bureau seeks approximately $32.8 million in civil penalties.

Citizens served three deposition notices on the Bureau in December 2022, seeking the depositions of a deputy associate director, assistant director, and a field examination manager.

The notices sought testimony regarding the Bureau’s theory and basis for asserting liability, the bases and calculations of the proposed relief sought, and narrow discovery as to whether the Bureau knew or should have known of Citizens’ alleged violations prior to 2014. The notices came after the Bureau’s Rule 30(b)(6) designee was admittedly unprepared to give testimony regarding the above topics, relying on a “testifying aid” in responding to questions, which was allegedly prepared by the Bureau’s litigation team.

In its motion for a protective order, the Bureau argued, among other things, that high-ranking government officials should not be subject to depositions, that it has already produced written discovery and documents regarding the sought testimony, and privilege. In opposition, Citizens claimed that the Bureau spent two years obstructing discovery and that in filing its motion, the Bureau disregarded a prior deposition directive from the court.

The federal judge issued an order denying the Bureau’s motion, finding that the Bureau failed to show good cause and its arguments were “unreasonable attempts to micromanage and restrict its adversary’s discovery strategy and defense preparation.” He noted that the Bureau failed to make a sufficient showing of “undue burden or expense” as to any of the three depositions, or that allowing them to proceed would subject anyone to “annoyance, embarrassment, or oppression.” The order noted that the Bureau can object to any specific questions posed during the depositions as allowed under Rule 30(c)(2).

Our Take

The court’s order forcing the Bureau to produce employees for deposition who can speak to the claims, facts, and documents the Bureau itself placed at issue in litigation, as well as the penalties sought by the Bureau, can be seen as a win for banks facing similar lawsuits. The order should be in the arsenal of any financial institution involved in litigation with the Bureau.

The Consumer Financial Protection Bureau (CFPB or Bureau) issued a final rule updating, among other things, the model form for the Fair Credit Reporting Act (FCRA) Summary of Consumer Rights and information that must be included in adverse action notices under the Equal Credit Opportunity Act (ECOA). Specifically, the CFPB is correcting the contact information in the Summary of Consumer Rights model form for multiple federal agencies (including the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC)), updating references to obsolete business types, and making other technical corrections. For ECOA, the Bureau is amending appendix A, which contains federal agency contact information that creditors must include in ECOA adverse action notices, and correcting its own contact information in appendix D.

As background, the Summary of Consumer Rights explains certain consumer rights available under the FCRA. Consumer reporting agencies (CRAs) must provide the Summary of Consumer Rights: (a) with each written disclosure from the CRA to a consumer (15 U.S.C. § 1681g(c)(2)(A)); and (b) with, or prior to providing, a consumer report for employment purposes (15 U.S.C. § 1681b(b)(1)(B)). A user must provide the Summary of Consumer Rights: (a) with the required disclosure prior to procuring an investigative consumer report (15 U.S.C. § 1681d(a)(1)); and (b) with pre-adverse action notices for employment purposes (15 U.S.C. § 1681b(b)(3)).

The updated model form is available on the CFPB website in English and Spanish.

As for ECOA, § 1002.9(b)(1) provides model language that satisfies certain disclosure requirements of 12 CFR 1002.9(a)(2) relating to adverse action notices. These notices must include federal agency contact information located in appendix A to Regulation B. The Bureau is revising appendix A to update agency contact information, including the OCC, FDIC, and the Federal Trade Commission. Additionally, appendix D to § 1002 sets forth the process by which entities may request official Bureau interpretations of Regulation B. The CFPB is amending paragraph 2 in appendix D to correct the zip code for the Bureau and to replace the reference to the Division of Research, Markets, and Regulations with a reference to the new, expanded Division of Research, Monitoring, and Regulations.

The rule becomes effective April 19, 2023, but the mandatory compliance date for the amendments to the FCRA Summary of Consumer Rights is March 20, 2024. As a result, CRAs, employers and creditors who are using the model forms and language have one year to update their forms and language.

On March 16, the Consumer Financial Protection Bureau (CFPB) released a compliance bulletin entitled Unfair Billing and Collection Practices After Bankruptcy Discharges of Certain Student Loan Debts. The compliance bulletin focused on the treatment of certain private student loans following a bankruptcy discharge. It’s also another example of the CFPB’s efforts to expand bankruptcy relief for student loans.

Under the Bankruptcy Code and applicable rules, in order to secure a discharge of “qualified education loans” in bankruptcy, borrowers must bring an adversary proceeding and demonstrate that the loans constitute an undue hardship. For a number of years, federal courts have been split on whether non-qualified private education loans are also subject to the undue hardship standard in the Bankruptcy Code. The CFPB’s Bulletin weighs in on this split of authority among federal courts on this issue in favor of greater availability of discharge for certain types of private student loans.

According to the CFPB, its examiners identified servicers that did not determine whether private education loans were qualified or non-qualified and, thus, improperly returned non-qualified education loans to repayment after discharge. The CFPB states that it directed these servicers to cease collection of the discharged loans and take remedial action, including conducting a multi-year lookback and issuing refunds to affected consumers.

Key findings from the compliance bulletin include:

  • According to the CFPB, examiners found that certain student loan servicers failed to maintain policies or procedures for distinguishing between loans that are discharged in the regular course of a bankruptcy proceeding and loans that require borrowers to initiate an adversary proceeding and meet the “undue hardship” standard.
  • Consequently, examiners identified instances where servicers resumed collecting on loans that had been discharged.
  • In these instances, CFPB examiners observed that most borrowers resumed payments, sometimes paying thousands of dollars on discharged debts.

Going forward, the CFPB stated it will focus on whether servicers: 1) continue to collect on loans that are discharged; 2) have adequate policies and procedures to identify the different types of loans; and 3) provide accurate information to borrowers about the status of their loans and available bankruptcy protections.

Notably, as discussed here, the U.S. Department of Justice (DOJ) recently released guidance to its attorneys regarding requests to discharge student loans in bankruptcy cases. The guidance developed in coordination with the Department of Education (DOE) advises DOJ attorneys to “recommend to the court that a debtor’s student loan be discharged if three conditions are satisfied: 1) the debtor presently lacks an ability to repay the loan; 2) the debtor’s inability to pay the loan is likely to persist in the future; and 3) the debtor has acted in good faith in the past in attempting to repay the loan.” We view this guidance as a further effort to promote the discharge of student loans in bankruptcy, but it remains to be seen whether courts will accept the standard set forth by the DOJ as being consistent with the “undue hardship” language in the Bankruptcy Code.