President Obama Signs Cohen’s Bipartisan National Guard & Reservist Debt Relief Extension Act into Law

December 18, 2015
Press Release

[WASHINGTON, DC] – President Obama signed into law today Congressman Steve Cohen’s (TN-09) bipartisan National Guard and Reservists Debt Relief Extension Act of 2015, H.R. 4246, 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. The law extends the existing “means test” exception until 2019. The bill, now law, was cosponsored by Congressman Dana Rohrabacher (R-CA), Congressman Jerrold Nadler (D-NY), and Congressman Randy Forbes (R-VA) and was supported by the Veterans of Foreign Wars (VFW) and the National Association of Consumer Bankruptcy Attorneys.

“I am pleased Congress and the President moved so swiftly to pass my bill and get it sign it into law,” said Congressman Cohen. “This law 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. 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.”

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, was set to expire later this year.  The National Guard and Reservist Debt Relief Extension Act of 2015 extends the exemption until December 2019.