Congressman Steve Cohen

Representing the 9th District of Tennessee

Congressmen Cohen and Cline Introduce National Guard and Reservists Debt Relief Extension Act

June 18, 2019
Press Release
Permits veterans to avoid “means test” when filing for bankruptcy

WASHINGTON – Congressmen Steve Cohen (TN-09) and Ben Cline (VA-06) introduced the National Guard and Reservists Debt Relief Extension Act to ensure that certain members of the National Guard and Reserves who fall on hard economic times after their military service will continue to obtain bankruptcy relief without having to fill out the substantial paperwork required by the so-called “means test” under Chapter 7 of the Bankruptcy Code. 

President Obama signed Congressman Cohen’s 2015 version of the National Guard and Reservists Debt Relief Extension Act which expires in December. The bill introduced today extends the relief for another four years.

Congressman Cohen made the following statement:

“I am pleased Congress saw the wisdom of protecting our veterans and voted for the previous version of this bill. The idea of relieving our veterans of burdensome paperwork was good then and it’s good now.  This bill is a way for our nation to recognize the sacrifice made by National Guard and Reserve members who have served on active duty or homeland defense since September 11 and may be suffering financial hardship. These veterans who have returned from Iraq and Afghanistan had their civilian lives disrupted to serve our country in war zones and homeland defense activities, and sometimes returned to financial distress. It is only fair that we help them during the bankruptcy process.”

In 2005, President Bush signed the Bankruptcy Abuse Prevention and Consumer Protection Act into law (Public Law 109–8, 119 Stat. 23).  Among the many changes it made was the establishment of a “means test” to determine a debtor’s ability to repay debts. Under this test, a Chapter 7 bankruptcy case is presumed to be an abuse of the bankruptcy process if it appears that the debtor has income in excess of certain thresholds.

The National Guard and Reservists Debt Relief Act of 2008, Public Law No. 110-438, created an exception to the means test’s presumption of abuse for members of the National Guard and Reserve who, after September 11, 2001, served on active duty or in a homeland defense activity for at least 90 days.  The exception is also available for 540 days after the servicemember leaves the military.  The National Guard and Reservist Debt Relief Extension Act of 2015 extended the exemption only until December 2019.