Congressmen Cline Introduces National Guard and Reservists Debt Relief Extension Act

July 5, 2019
Press Release
Permits veterans to avoid “means test” when filing for bankruptcy

WASHINGTON – Congressmen Ben Cline (VA-06) and Steve Cohen (TN-09) recently introduced the National Guard and Reservists Debt Relief Extension Act. The bill ensures that certain members of the National Guard and Reserves who fall on hard economic times after returning from active duty deployment 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 legislation extends existing law from 2015 set to expire in December of this year.

“Our men and women in uniform make untold sacrifices in service to our country,” Cline said. “When they return, many face difficult economic situations. That is why the National Guard and Reservists Debt Relief Extension Act is so important. This bill extends already existing law which is help our veteran reservists rebuild their financial lives. I am proud to co-sponsor this bipartisan legislation and look forward to its passage.”

Cohen released 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.