Congressman Cohen Introduces Bipartisan National Guard & Reservist Debt Relief Extension Act

[WASHINGTON, DC] – Congressman Steve Cohen (TN-09), Congressman Dana Rohrabacher (R-CA) and Congressman Jerrold Nadler (D-NY) today introduced the bipartisan National Guard and Reservists Debt Relief Extension Act of 2015 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. This bill extends the existing “means test” exception, which will expire at the end of the year if Congress fails to act, until December 2019.

“This bill is a way for our nation to recognize the tremendous 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,” said Congressman Cohen. “These veterans who have returned from Iraq and Afghanistan disrupted their civilian lives to serve our country in war zones and homeland defense activities, and could face a risk of financial distress. It is only fair that we help them during the bankruptcy process. I urge my colleagues to move swiftly in passing this extension before it expires at the end of the year.”

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. This exception, however, is set to expire later this year. The National Guard and Reservist Debt Relief Extension Act of 2015 would extend the exemption until December 2019.