In terms of bankruptcy reform, there were a few major additions and overhauls to the federal law that rules and regulates the bankruptcy process. One of those major overhauls was legislation that was passed only half a decade ago. The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) was passed to prevent alleged abuse of the bankruptcy process.
One major addition to the process created by the law was the means test. The means test required individuals filing for Chapter 7 bankruptcy protection to prove that their resources were inadequate in order to require liquidation of their assets and a fresh start.
Only a few years later, in 2008, Congress passed a second bill that amended BAPCPA. The amendment exempted members of the National Guard and U.S. Reserve who had served for a minimum of 90 days from having to prove their financial position under the means test. The guard and reserve members were allowed to use the exemption for 540 days beginning when he or she left the military. That provision, however, was set to expire at the close of this year.
“In these tough economic times, veterans returning from Iraq and Afghanistan face a risk of financial distress,” said U.S. Rep. Steve Cohen in speech this Tuesday. “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.
Cohen made those statements during a floor speech shortly before the House passed a bill that would extend the service member exemption for another four years until December 2015. The bill has already passed in the Senate as well and is now on its way to the White House for a presidential signature.
Source: The Commercial Appeal, “House approves bill by Rep. Steve Cohen to exempt Guard, Reserves from bankruptcy ‘means test,'” Bartholomew Sullivan, Dec. 2, 2011