Two legislators have introduced a measure that would relieve certain veterans of onerous paperwork as they go through the process of bankruptcy.
The National Guard and Reservists Debt Relief Extension Act would make sure certain members of the National Guard and Reserves who experience financial hardship after their military service get bankruptcy relief without having to fill out time-consuming paperwork required under the “means test” under Chapter 7 of the Bankruptcy Code, according to a June 18 announcement from bill co-sponsor Rep. Steve Cohen, D-Tenn.
The means test was created to prevent high earners from wiping their financial slate clean through Chapter 7 bankruptcy. If the debtor’s income exceeds a certain threshold, the means test assumes he or she is abusing the bankruptcy process. The newly introduced legislation would allow veterans to avoid the means test when filing for bankruptcy.
The National Guard and Reservists Debt Relief Act already makes an exception to the means test’s presumption of abuse for members of the National Guard and Reserve who after Sept. 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 a service member departs the military.
Cohen’s 2015 version of the National Guard and Reservists Debt Relief Extension Act expires in December, and the bill introduced yesterday extends the relief for another four years.