The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) implemented a new bankruptcy means test that required Chapter 7 filers to prove the inadequacy of their resources. While the legislation was intended to prevent debtors with sufficient income from abusing the system, Congress modified the law in 2008 to exempt National Guard and U.S. Reservists who had served at least 90 days since Sept. 11, 2001. While that provision was supposed to expire at the end of 2011, the Commercial Appeal reported on December 2, 2011, that a bill passed by both houses of Congress would extend the exemption until December 2015.
“In these tough economic times, veterans returning from Iraq and Afghanistan face a risk of financial distress,” Tennessee Representative Steve Cohen said in a floor speech, according to the Appeal. The author of the bill added, “This is especially so for members of the National Guard and Reserves, many of whom disrupted their civilian lives to serve their country in war zones and homeland defense activities.”
The bill will now go to President Barack Obama for his signature, but the Hill reported that Vermont Senator Patrick Leahy wanted to go even further and have the means test done away with for all Americans.
“In my view, no American, particularly in times of such economic hardship, should have this burdensome requirement of the so-called means-test imposed upon them,” Leahy said from the floor, according to the Hill. “The bankruptcy system was established to protect Americans and give them a fresh start.”
While the National Guard and Reservist Debt Relief Extension Act, H.R. 2192, would allow qualifying soldiers to obtain Chapter 7 bankruptcy relief without enduring the means test, do you agree with Senator Leahy’s comments to get rid of means testing in general? Given the state of the economy and the number of people needing foreclosure help, do you think such a move would lead to an overall increase in the number of Americans trying to take advantage of the Chapter 7 bankruptcy process?
Law Firm of Kevin D. Judd – Washington DC bankruptcy attorney