    [House Hearing, 110 Congress]
    [From the U.S. Government Publishing Office]

             NATIONAL GUARD AND RESERVISTS DEBT RELIEF ACT OF 2008

    =======================================================================

                                    HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON
                       COMMERCIAL AND ADMINISTRATIVE LAW

                                     OF THE

                           COMMITTEE ON THE JUDICIARY
                            HOUSE OF REPRESENTATIVES

                           ONE HUNDRED TENTH CONGRESS

                                 SECOND SESSION

                                       ON

                                   H.R. 4044

                                   __________

                                 APRIL 1, 2008

                                   __________

                               Serial No. 110-175

                                   __________

             Printed for the use of the Committee on the Judiciary

          Available via the World Wide Web: http://judiciary.house.gov

                                   ----------
                             U.S. GOVERNMENT PRINTING OFFICE

    41-581 PDF                       WASHINGTON : 2009

    For sale by the Superintendent of Documents, U.S. Government Printing
    Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800;
    DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC,
    Washington, DC 20402-0001

                           COMMITTEE ON THE JUDICIARY

                     JOHN CONYERS, Jr., Michigan, Chairman
    HOWARD L. BERMAN, California         LAMAR SMITH, Texas
    RICK BOUCHER, Virginia               F. JAMES SENSENBRENNER, Jr.,
    JERROLD NADLER, New York                 Wisconsin
    ROBERT C. ``BOBBY'' SCOTT, Virginia  HOWARD COBLE, North Carolina
    MELVIN L. WATT, North Carolina       ELTON GALLEGLY, California
    ZOE LOFGREN, California              BOB GOODLATTE, Virginia
    SHEILA JACKSON LEE, Texas            STEVE CHABOT, Ohio
    MAXINE WATERS, California            DANIEL E. LUNGREN, California
    WILLIAM D. DELAHUNT, Massachusetts   CHRIS CANNON, Utah
    ROBERT WEXLER, Florida               RIC KELLER, Florida
    LINDA T. SANCHEZ, California         DARRELL ISSA, California
    STEVE COHEN, Tennessee               MIKE PENCE, Indiana
    HANK JOHNSON, Georgia                J. RANDY FORBES, Virginia
    BETTY SUTTON, Ohio                   STEVE KING, Iowa
    LUIS V. GUTIERREZ, Illinois          TOM FEENEY, Florida
    BRAD SHERMAN, California             TRENT FRANKS, Arizona
    TAMMY BALDWIN, Wisconsin             LOUIE GOHMERT, Texas
    ANTHONY D. WEINER, New York          JIM JORDAN, Ohio
    ADAM B. SCHIFF, California
    ARTUR DAVIS, Alabama
    DEBBIE WASSERMAN SCHULTZ, Florida
    KEITH ELLISON, Minnesota

                Perry Apelbaum, Staff Director and Chief Counsel
          Sean McLaughlin, Minority Chief of Staff and General Counsel
                                     ------

               Subcommittee on Commercial and Administrative Law

                    LINDA T. SANCHEZ, California, Chairwoman

    JOHN CONYERS, Jr., Michigan          CHRIS CANNON, Utah
    HANK JOHNSON, Georgia                JIM JORDAN, Ohio
    ZOE LOFGREN, California              RIC KELLER, Florida
    WILLIAM D. DELAHUNT, Massachusetts   TOM FEENEY, Florida
    MELVIN L. WATT, North Carolina       TRENT FRANKS, Arizona
    STEVE COHEN, Tennessee

                         Michone Johnson, Chief Counsel

                        Daniel Flores, Minority Counsel

                                C O N T E N T S

                                  ----------

                                 APRIL 1, 2008

                                                                       Page

                                    THE BILL

    H.R. 4044, the ``National Guard and Reservists Debt Relief Act of
      2008''.........................................................     3

                               OPENING STATEMENT

    The Honorable Linda T. Sanchez, a Representative in Congress from
      the State of California, and Chairwoman, Subcommittee on
      Commercial and Administrative Law..............................     1
    The Honorable Trent Franks, a Representative in Congress from the
      State of Arizona, and Member, Subcommittee on Commercial and
      Administrative Law.............................................     6

                                   WITNESSES

    The Honorable Janice Schakowsky, a Representative in Congress
      from the State of Illinois
      Oral Testimony.................................................     9
      Prepared Statement.............................................    14
    The Honorable Dana Rohrabacher, a Representative in Congress from
      the State of California
      Oral Testimony.................................................    17
      Prepared Statement.............................................    19
    Mr. Raymond C. Kelley, National Legislative Director, AMVETS,
      Lanham, MD
      Oral Testimony.................................................    31
      Prepared Statement.............................................    33
    Mr. Jack F. Williams, Scholar-in-Residence, American Bankruptcy
      Institute, Alexandria, VA
      Oral Testimony.................................................    38
      Prepared Statement.............................................    40
    Mr. Edward C. Boltz, the Law Offices of John T. Orcutt, P.C.,
      Durham, NC, on behalf of the National Association of Consumer
      Bankruptcy Attorneys
      Oral Testimony.................................................    49
      Prepared Statement.............................................    51

              LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

    Prepared Statement of the Honorable Chris Cannon, a
      Representative in Congress from the State of Utah, and Ranking
      Member, Subcommittee on Commercial and Administrative Law......     7
    Material submitted by the Honorable Janice Schakowsky, a
      Representative in Congress from the State of Illinois..........    10
    Prepared Statement of the Honorable John Conyers, Jr., a
      Representative in Congress from the State of Michigan,
      Chairman, Committee on the Judiciary, and Member, Subcommittee
      on Commercial and Administrative Law...........................    26

                                    APPENDIX
                   Material Submitted for the Hearing Record

    Answers to Post-Hearing Questions from the Honorable Janice
      Schakowsky, a Representative in Congress from the State of
      Illinois.......................................................    64
    Answers to Post-Hearing Questions from the Honorable Dana
      Rohrabacher, a Representative in Congress from the State of
      California.....................................................    66
    Answers to Post-Hearing Questions from Raymond C. Kelley,
      National Legislative Director, AMVETS, Lanham, MD..............    68
    Answers to Post-Hearing Questions from Jack F. Williams, Scholar-
      in-Residence, American Bankruptcy Institute, Alexandria, VA....    71
    Answers to Post-Hearing Questions from Edward C. Boltz, the Law
      Offices of John T. Orcutt, P.C., Durham, NC, on behalf of the
      National Association of Consumer Bankruptcy Attorneys..........   104

             NATIONAL GUARD AND RESERVISTS DEBT RELIEF ACT OF 2008

                                  ----------

                             TUESDAY, APRIL 1, 2008

                  House of Representatives,
                         Subcommittee on Commercial
                                and Administrative Law,
                                    Committee on the Judiciary,
                                                        Washington, DC.

        The Subcommittee met, pursuant to notice, at 2:08 p.m., in
    rom 2141, Rayburn House Office Building, the Honorable Linda T.
    Sanchez (Chairwoman of the Subcommittee) presiding.
        Present: Representatives Conyers, Sanchez, Delahunt, Watt,
    Keller, Feeney, and Franks.
        Staff present: Susan Jensen-Lachmann, Majority Counsel;
    Daniel Flores, Minority Counsel; and Adam Russell, Majority
    Professional Staff Member.
        Ms. Sanchez. This hearing of the Committee on the
    Judiciary, Subcommittee on Commercial and Administrative Law,
    will now come to order.
        Without objection, the Chair will be authorized to declare
    a recess of the hearing at any time.
        I will now recognize myself for a short statement.
        Since September 11, 2001, nearly half a million members of
    the National Guard and Reserve have been called to serve in
    Iraq and Afghanistan. As you might imagine, these lengthy and
    often unanticipated deployments not only disrupt the lives of
    these service members and their families, but can also lead to
    financial hardship. It is estimated, for example, that up to 26
    percent of National Guard members who are deployed experience
    money problems as a direct result of their deployment.
        You may also recall the very poignant testimony that we
    received at our hearing last May from a Chapter 13 debtor about
    her financial circumstances. She explained how after her
    husband, a member of the Army Reserve, was called to active
    duty and deployed to Iraq, the family income decreased by more
    than $1,000 per month, which, among other reasons, caused her
    and her husband to seek bankruptcy relief.
        One would think that our bankruptcy law would honor the
    special contributions of these brave men and women who make so
    many sacrifices to protect our Nation. Sadly, it does not.
        Exactly 3 years ago this very month, President Bush signed
    into law the Bankruptcy Abuse Prevention and Consumer
    Protection Act which contains some of the harshest changes in
    consumer bankruptcy law in more than 25 years. One of the more
    draconian changes is the so-called means test, which requires
    debtors to prove their inability to repay their debts through a
    complex bureaucratic maze at the risk of having their cases
    dismissed for being an abuse of the system.
        The means test is particularly unfair to National Guard and
    Reserve members both as a matter of principle and practice.
    Here is just one example: Service members, while serving in
    Iraq or Afghanistan, typically receive higher compensation in
    the form of combat pay, while they incur fewer living expenses.
    When they return to the United States, however, they receive
    less pay, and their expenses increase.
        The means test, nevertheless, requires a debtor to
    calculate his or her income based on the average monthly income
    that he or she received during the 6-month period preceding the
    filing date of the bankruptcy case rather than the debtor's
    current income. As a result of the means test, a service member
    could appear to have higher net income and, therefore, be at
    risk of having his or her case dismissed for abuse.
        To overcome this presumption, a service member must then
    demonstrate special circumstances which can oftentimes be a
    burden to undertake. This is not the way our consumer
    bankruptcy laws should work. Our service members deserve
    better.
        Today, we are examining a proposed legislative remedy for
    this issue. H.R. 4044 would amend the Bankruptcy Code and
    create a narrow exception for the means test for a National
    Guard or Reserve member if he or she is on active duty or
    performs a homeland defense activity after September 11, 2001,
    for at least 60 days and for the first 6 months after
    completion of such service.
        [The bill, H.R. 4044, follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Ms. Sanchez. Accordingly, I very much look forward to
    hearing from our witnesses. In particular, I commend my
    colleagues, Representative Schakowsky and Representative
    Rohrabacher, for their leadership on this issue.
        At this time, I would now like to recognize my colleague,
    Mr. Franks, for any opening remarks that he may have.
        Mr. Franks. Well, thank you, Madam Chair.
        And I want to welcome our witnesses. I especially would
    like to extend a warm welcome to our colleagues, Mr.
    Rohrabacher and Ms. Schakowsky.
        As the Committee is all too aware, the regular Ranking
    Member, Mr. Cannon, is not here at this moment--he may be here
    a little bit later--he could not be, and so I am going to do my
    best to try to reflect his perspective here, if I can.
        Madam Chair, the legislation that we are considering here
    today reflects what I believe is a bipartisan effort to do
    something which I think we all sympathize with. It is an effort
    to support our troops. Now the legislation seeks to help our
    Reservists and National Guardsmen affected by our wars in Iraq
    and Afghanistan.
        Reservists and Guardsmen pay a particular and very
    practical sacrifice when they are called to duty. Unlike most
    of our troops, they have to come off the civilian pay scale and
    adopt--or I should say adapt--to the lower military scale in
    most cases. There are reports that some of these patriotic men
    and women, especially those whose savings may be low when they
    report to duty in the first place, can be pushed over the
    financial brink when they take that pay cut. Strangely, they
    may have to consider bankruptcy in the wake of reporting for
    service.
        I think that is something we could all collectively say
    that we are very concerned with. H.R. 4044 responds by seeking
    to lift the means test in Chapter 7 bankruptcy, making it
    easier for hard-pressed Reservists and Guardsmen to wipe their
    debt slates clean and start over again. I applaud that concern,
    and I applaud the concern that has actually produced the
    proposal.
        But I want to sound a few notes of caution about the issues
    that I think we have to explore today and that may give us
    reason to ask whether we ought to propose some different
    responses. For example, I question whether or not we should
    make bankruptcy easier for these noble men and women instead of
    making it easier for them to stay out of bankruptcy in the
    first place.
        And I also want to highlight that service men who are
    teetering on the brink of bankruptcy may not lose just their
    personal assets. They may lose their security clearances
    according to the Department of Defense press release, and if we
    help them go into bankruptcy instead of helping them stay out
    of it, we may create an actual national security problem,
    increasing numbers of Reservists and Guardsmen serving in the
    war on terror without the security clearances they need to
    fight that war.
        When we consider relaxing the means test for these service
    men, we should also ask ourselves if, in so doing, we might
    also undermine other provisions of the laws affecting them,
    such as the Soldiers and Sailors Relief Act, which exists to
    protect service men.
        I raise these questions not necessarily in opposition to
    the bill, but to perform the vital role that only this
    Subcommittee can fulfill, and that is to make sure that before
    enacting legislation affecting the Bankruptcy Code that we are
    sure what we are doing is necessary, number one; number two,
    that it will not unduly undermine other important interests;
    and, finally, that it will work because bankruptcy, as we all
    know, Madam Chair, should always be a last resort, and I think
    that is true in the minds of the service men themselves as
    well.
        And finally, I raise a note of caution because the means
    test is at the heart of the consumer bankruptcy reforms we
    enacted in the Bankruptcy Abuse Prevention and Consumer
    Protection Act of 2005. I think we should be especially
    vigilant of attempts to undo that. I think it is imperative
    that we ask today the kinds of questions I am proposing. Our
    country and our service men deserve no less than the most
    honest and diligent effort that we can deliver in this proposal
    or any other to make their lives better and to help them.
        Madam Chair, with that, I thank the witnesses, look forward
    to your testimony, and yield back my time.
        Ms. Sanchez. Thank you, Mr. Franks, and I appreciate you
    filling in for Mr. Cannon today.
        Without objection, other Members' opening statements will
    be included in the record.
        [The prepared statement of Mr. Cannon follows:]
     Prepared Statement of the Honorable Chris Cannon, a Representative in
     Congress from the State of Utah, and Ranking Member, Subcommittee on
                       Commercial and Administrative Law
        Thank you Madam Chair and welcome to our witnesses. I'd like to
    extend a particularly welcome to our colleagues, Mr. Rohrabacher and
    Ms. Schakowsky.
        The legislation we are considering today reflects a bipartisan
    effort to do something with which I think we all sympathize. That is,
    to support our troops.
        The legislation seeks to help our reservists and National Guardsmen
    affected by our wars in Iraq and Afghanistan. Reservists and guardsmen
    pay a particular and very practical sacrifice when they are called to
    duty. Unlike most of our troops, they have to come off of the civilian
    pay scale, and adapt to the often lower military pay scale.
        There are reports that some of these patriotic men and women--
    particularly those whose savings may have been low when they report for
    duty--can be pushed over the financial brink when they take that pay
    cut. Strangely, they may have to consider bankruptcy in the wake of
    reporting for service.
        I suspect we all agree that is something we should be concerned
    with.
        H.R. 4044 responds by seeking to lift the means test in Chapter 7
    bankruptcy, making it easier for hard-pressed reservists and guardsmen
    to wipe their debt slates clean and start over again.
        I applaud the concern that produced this proposal. But I want to
    sound several notes of caution about issues that I think we must
    explore today, and that may give us reason to ask whether we ought to
    propose a different response.
        For example, I question whether we should be making bankruptcy
    easier for these fine men and women, instead of making it easier for
    them to stay out of bankruptcy.
        I also want to highlight that servicemen who are teetering on the
    brink of bankruptcy may not lose just their personal assets. They may
    lose their security clearances according to Department of Defense
    precedents. If we help them get into bankruptcy, instead of help them
    stay out of it, we may create a real national security problem--
    increasing numbers of reservists and guardsmen serving in the War on
    Terror without the security clearances they need to fight that war.
        When we consider relaxing the means test for these servicemen, we
    also should ask ourselves if, in doing that, we might also undermine
    other provisions of the law affecting them, such as the Soldiers' and
    Sailors' Relief Act, which exist to protect servicemen.
        I raise these issues, not necessarily in opposition to the bill,
    but to perform the vital role that only this Subcommittee can fulfill.
    That is to make sure that before enacting legislation affecting the
    Bankruptcy Code, we are sure that what we are doing is necessary, will
    not unduly undermine other important interests, and will work.
        Because bankruptcy, as we all know, should always be a last resort.
        Finally, I raise a note of caution because the means test is at the
    heart of the consumer bankruptcy reforms we enacted in the Bankruptcy
    Abuse Prevention and Consumer Protection Act of 2005.
        I think we should be especially vigilant of attempts to undo it. I
    think it is imperative that we ask today the kinds of questions I am
    posing. Our country and our servicemen deserve no less than the
    frankest, most fair assessment we can deliver of this proposal to help
    them.
        I yield back the remainder of my time.

        Ms. Sanchez. I am now pleased to introduce the witnesses
    for our first panel for today's hearing.
        Our first witness is Congresswoman Jan Schakowsky. She
    represents the Ninth Congressional District of Illinois. Ms.
    Schakowsky was first sworn in as a Member of the House of
    Representatives in 1998 and, since then, has continued her
    fight for economic and social justice, improved quality of life
    for all, and a national investment in health care, public
    education, and housing needs.
        Ms. Schakowsky serves on the Steering and Policy Committee,
    the House Select Committee on Intelligence, and the House
    Energy and Commerce Committee as Vice Chair of the Subcommittee
    on Commerce, Trade, and Consumer Protection. She is also a
    Member of both the Subcommittee on Health and the Subcommittee
    on Oversight and Investigations of the House Energy and
    Commerce Committee.
        Ms. Schakowsky is the sponsor of H.R. 4044.
        Our second witness is Congressman Dana Rohrabacher who
    represents the 46th District of California. Elected to Congress
    in 1988, Mr. Rohrabacher champions human rights and democracy.
    He serves as the Ranking Member of the Investigations and
    Oversight Subcommittee of the House Committee on International
    Relations and as a Member of the House Committee on Science.
        Mr. Rohrabacher is an original co-sponsor of H.R. 4044.
        I want to thank you both for your willingness to
    participate in today's hearing. Without objection, your written
    statements will be placed into the record, and we would ask
    that you limit your oral testimony to 5 minutes.
        You will note the lighting system. I am sure you are both
    familiar with it. When your time begins, you will get the green
    light. Four minutes in, you will receive a yellow light,
    letting you know that you have a minute to finish your
    testimony, and we will hit the red light when the time expires.
    We, of course, will allow you to finish any concluding thoughts
    before moving on to our next witness.
        After each witness has presented his or her testimony,
    Subcommittee Members will be permitted to ask questions subject
    to the 5-minute limit.
        With that, I would invite Ms. Schakowsky to please proceed
    with her testimony.

    TESTIMONY OF THE HONORABLE JANICE SCHAKOWSKY, A REPRESENTATIVE
                 IN CONGRESS FROM THE STATE OF ILLINOIS

        Ms. Schakowsky. Thank you very much, Chairwoman Sanchez,
    Mr. Franks, and the rest of the Subcommittee. I appreciate so
    much your holding the hearing today for the members of the
    National Guard and Reserve who face bankruptcy when they return
    from service.
        Let me depart from my written statement and reply just
    briefly to Mr. Franks. You know, when Congress first passed in
    2005 the new Bankruptcy Act, Congress did have the wisdom to
    exempt disabled veterans from the means test, and so we see
    this as a very narrow addition to that at the Guard and Reserve
    as well.
        And I could not agree with you more that we should do all
    that we can to prevent the situation from these heroes having
    to face bankruptcy in the first place, but having said that, we
    know that some will, and so this is to address those, and we do
    not know how many, although we know, as the Chairwoman said,
    since 9/11, more than 460,000 Reservists and Guardsmen have
    been called to active duty in Iraq and Afghanistan, and a
    quarter of those more than once.
        These men and women have left their jobs and families to
    answer the call often with little or no notice. Service members
    who own and operate small businesses put their businesses on
    hold, sometimes sacrificing them altogether, while they serve
    their country. Many service members face unexpected extended
    tours of 15 months or longer, leaving them with almost no way
    to prepare financially.
        You mentioned, Mr. Franks, those who lose money when they
    go on active duty, but it also works the other way, too. The
    means test for veterans who file for bankruptcy has a
    particularly adverse income on some of them because, again, as
    the Chairwoman mentioned, combat pay of soldiers in Iraq or
    Afghanistan may be higher than their salaries at home, and they
    have fewer expenses when they are overseas so that when they
    return home, these individuals face lower incomes and higher
    expenses, and because the means test factors in a person's
    income and expenses for the 6 months preceding bankruptcy
    filing, sometimes a veteran's income is artificially inflated,
    and their expenses seem unduly low, and as a result, they risk
    failing the means test and facing Chapter 11 or Chapter 13.
        So our bill would simply allow the National Guard and
    Reservists to file for bankruptcy without the burden of the
    means test. We have 46 cosponsors, including 14 Republicans. It
    is a bipartisan piece of legislation, and it would only apply
    to the heroes who have served in the armed forces for more than
    60 days since September 11, 2001, and would exempt them from
    the test for up to 180 days after they return home.
        I would love to be able to tell you how widespread the
    problem is. The Veterans Administration reports that veterans
    have difficulties finding a job in the first 2 years after they
    return home, and that they are more likely to earn lower wages.
        Today's Washington Post ran a front-page article in their
    business section on how bleak the market is--18 percent of
    veterans recently back from tours of duty are unemployed, and
    of those who have been able to find work, 25 percent earn less
    than $22,000 a year. There are also currently 1,500 veterans of
    the wars in Iraq and Afghanistan who are homeless, and
    thousands of veterans return from the war with physical and
    mental injuries which make returning to work difficult or
    impossible.
        The Illinois Department of Veterans Affairs assists many
    veterans who face financial hardship, and I would like to ask
    unanimous consent, Madam Chairwoman, to insert statements into
    the record from caseworkers who, too often, assist veterans
    facing financial collapse, if I could put those into the
    record?
        Ms. Sanchez. Without objection, so ordered.
        [The information referred to follows:]
    Material submitted by the Honorable Janice Schakowsky, a Representative
                     in Congress from the State of Illinois

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Ms. Schakowsky. Our legislation would help returning
    service men like Jeremy W., a hero from my State, who was
    deployed from March 2006 to 2007, June of 2007. He is a member
    of the National Guard and, like many others, asked not to be
    identified because of the stigma surrounding financial
    problems.
        After he returned, he did not want to be away from his
    family. He decided not to return to his previous job as a truck
    driver, instead opting to take a lower-paid job. He now works 6
    days a week to pay his bills and is teetering on the brink of
    losing his house.
        The men and women who will risk their lives to protect us
    deserve protection in return. These selfless individuals should
    not face harsh bankruptcy procedures if they are in financial
    distress when they return home, even after we have tried to
    help them, and so when changes are made to the bankruptcy laws,
    they work for the disabled veterans, we hope that we will do
    the same for the Reservists and National Guard.
        Thank you.
        [The prepared statement of Ms. Schakowsky follows:]
          Prepared Statement of the Honorable Janice D. Schakowsky, a
             Representative in Congress from the State of Illinois

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Ms. Sanchez. Thank you, Ms. Schakowsky. We appreciate your
    leadership on this issue and your taking the time to testify
    before the Subcommittee today.
        At this time, I would invite Mr. Rohrabacher to please
    begin his testimony.

     TESTIMONY OF THE HONORABLE DANA ROHRABACHER, A REPRESENTATIVE
                IN CONGRESS FROM THE STATE OF CALIFORNIA

        Mr. Rohrabacher. Thank you very much, Chairwoman Sanchez,
    Representative Franks, and other Members of the Subcommittee.
        We thank you for holding this hearing on H.R. 4044, a
    bipartisan bill that I originally introduced in the 109th
    Congress with the co-sponsorship of Representative Schakowsky,
    and it was reintroduced by Representative Schakowsky this year
    and myself as a co-sponsor.
        Let me note that this change was first proposed by
    Representative Schakowsky as a motion to recommit in the
    original bankruptcy reform bill. I was misinformed by the
    Republican leadership on the floor of the House at that time. I
    was told that this motion to recommit was redundant to changes
    that already existed in the law, and I was very upset when I
    found out that I had been misinformed and had voted the wrong
    way.
        At that time, I pledged myself to work with Representative
    Schakowsky to correct that situation, and that is what this
    bill is all about, correcting what should have been a no-
    brainer to begin with, except that politics got in the way.
    This bill makes a very small and targeted change to the current
    bankruptcy law and places our National Guard and Reservists
    veterans under the bankruptcy law in place prior to 2005.
        Let me note at this time that I am a strong supporter of
    the Bankruptcy Reform Act that passed. Unfortunately, this
    should have been in that bill.
        As members of the National Guard and Reservists return from
    their tours of duty in Afghanistan and Iraq, they can face a
    new battle at home, which we have just heard. Quite often,
    these patriots will face financial hardship as they left better
    paying jobs to serve our country. For those members of the
    National Guard and the Reserves who deal with mounting bills
    during their time away and face bankruptcy upon their return,
    H.R. 4044 provides that these heroes will be treated under the
    prior system, which did not require them to repay all of their
    debts accumulated as a result of their service.
        This bill has been written to provide a small and targeted
    change to the bankruptcy law for a select group of people who
    deserve it the most. It is important to note that this bill
    will not apply to the entirety of the armed forces, as we just
    heard. The fact is many of those in the regular armed forces do
    not have the same problem. It is just for the members of the
    National Guard and Reserves who have been called on to disrupt
    their lives at home and to serve lengthy tours overseas.
        Prior to 9/11 and the Iraq war, these veterans could have
    been relatively assured that they would have a regular
    schedule; they would not face this disruption in their life for
    long periods of time. That has changed since 9/11, and now,
    quite often, we throw the Reserves and National Guard into
    economic and personal chaos as we call them up to defend their
    country.
        National Guard members and Reservists now have very little
    idea how long they must be away from home, and when they
    return, they may be called up again. So these veterans do not
    know exactly what their economic situation is going to be, and
    for this reason, they need to be treated in a special way. It
    is for this reason the National Guard and Reservists deserve
    this change.
        These heroes have made tremendous sacrifices for the sake
    of this Nation, and this bill will simply ensure that these
    heroes will not face bankruptcy and face a negative outcome for
    the fact of their service to the country. So I wholeheartedly
    support this amendment, and I certainly commend my fellow
    Representative for the hard work that she has put into this
    from the very beginning, since the day that we passed the
    bankruptcy bill when the Republicans were in the majority, when
    this should have been in that bill in the first place, and some
    of us who wanted to vote for it were misinformed as to whether
    or not this was actually being taken care of.
        So thank you very much, and I would ask my Republican and
    Democratic colleagues to support this reform.
        [The prepared statement of Mr. Rohrabacher follows:]
    Prepared Statement of the Honorable Dana Rohrabacher, a Representative
                    in Congress from the State of California

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Ms. Sanchez. Thank you.
        I want to thank the first panel for their testimony. I know
    that Ms. Schakowsky has an Energy and Commerce Committee
    commitment, so if you need to be excused, you may leave at any
    time.
        I personally do not have any questions for the witnesses.
    Does any----
        Mr. Watt. Madam Chair?
        Could I just encourage both of my colleagues to look at the
    title to this bill, which I think is very misleading? Actually,
    the means test is the only thing that was worth having in the
    bankruptcy reform bill. So when you say exempt people from the
    means test, that is not what you are doing, and I do not think
    that is what the language of the bill actually does.
        It actually gives service people, regardless of their prior
    income, the benefit of having a means test. It does not exempt
    them from the means test because the means test itself is a
    positive thing. It is about the only thing that was positive in
    the bankruptcy reform bill when you get right down to it.
        So I think your bill is misnamed, is the point I am making,
    and I hope you all will take a look at that.
        Ms. Sanchez. Does the gentleman yield back his time?
        Mr. Rohrabacher. Thank you for that analysis. I appreciate
    that.
        Ms. Sanchez. Any other Members have questions?
        Mr. Franks is recognized for 5 minutes.
        Mr. Franks. Well, thank you, Madam Chair.
        I guess, Ms. Schakowsky, I will address it to you first,
    and then Mr. Rohrabacher can respond as well.
        Is there a possibility that the service men would be
    exempted already and qualify for relief under the circumstance
    already because we put a special circumstances provision in the
    legislation, and is that provision not applied or not adequate
    to the task that you are trying to accomplish here?
        Ms. Schakowsky. It is not adequate to the test, and,
    actually, that was the intention of this amendment, was to make
    sure that these individuals were covered, and that was the
    information that you were told, that they were covered, but
    they are not.
        Mr. Franks. And just for clarity, I mean, this is really
    the only issue you are trying to address here, not down the
    road that there would be an additional expansion of this? This
    is the only thing?
        Ms. Schakowsky. No. No. As Mr. Rohrabacher stated, this is
    a very narrow, targeted bill, something I had tried initially
    to have as part of the bankruptcy bill, just like the disabled
    veterans, and this is it.
        Mr. Franks. Mr. Rohrabacher, is there anything you want to
    add to that?
        Mr. Rohrabacher. There should be no doubt at all after this
    bill what the intent is, and from the people who I have spoken
    to, there is doubt as to the way it is now.
        Mr. Franks. Madam Chair, I just would applaud the attitudes
    and the motivations of both of the Members there. Obviously,
    they are trying to do something that they believe is important
    to the cause of helping our service men and women.
        So, with that, I yield back.
        Ms. Sanchez. The gentleman yields back the balance of his
    time.
        Any other Members seek to be recognized?
        Mr. Delahunt. Madam Chair?
        Ms. Sanchez. Mr. Delahunt is recognized for 5 minutes.
        Mr. Delahunt. I wonder if our colleagues would consider,
    rather than 6 months, a longer period of time. I think what we
    are discovering is when the men and women return from active
    duty, just the readjustment, if you will, to civilian life--in
    some cases, their ability to come back into the workplace is a
    difficult transition.
        In 6 months, to us, while we sit here in Washington and
    have discussions about what is happening in Iraq, Afghanistan,
    and elsewhere in the world, the reality, I think, that these
    men and women face is something entirely different. And I
    wonder how quickly that readjustment back into civilian life,
    what all of that entails, might require more than 6 months.
        I was just discussing with the former Ranking Member here,
    Mr. Watt, the possibility of a friendly amendment about a year
    or something along those lines. But I just put it out to----
        Ms. Schakowsky. Let me just say that I would certainly see
    that amendment as a friendly amendment to the legislation.
        Mr. Rohrabacher. I would not rule it out. I would suggest
    that we need to, you know, make a decision of what that date is
    and move forward.
        Ms. Sanchez. The gentleman yields back?
        The gentleman yields back his time.
        Any other Members?
        Mr. Keller?
        Mr. Keller. Thank you, Madam Chairwoman.
        I see Mr. Rohrabacher and Ms. Schakowsky co-sponsoring the
    bill. I am wondering if both of you have read it here. You seem
    such polar opposites philosophically, but you have come
    together on a good cause here.
        Ms. Schakowsky. Actually, we are best friends.
        Mr. Keller. Well, good deal.
        Do you agree with that characterization?
        Mr. Rohrabacher. Oh, yes, I do. And, in fact, I remember
    talking to a particular Republican leader on the floor and
    saying, ``Why are we opposing this? This is a no-brainer.''
        Mr. Keller. Yes.
        Mr. Rohrabacher. And then being assured, ``Well, do not
    worry. This is all redundant, and that is just a political
    maneuver on their part,'' and the fact is I believe that it was
    a political maneuver on the part of that Republican leader,
    unfortunately.
        Mr. Keller. Well, I saw Rohrabacher scribbling on a piece
    of paper ``Schakowsky BFF,'' and I wondered what that meant.
    Now I know. You are best friends forever.
        Let me ask you this, Mr. Rohrabacher. I could tell you were
    impassioned. You are a little upset. You felt you were
    misinformed about the motion to recommit that Ms. Schakowsky
    offered by you being told by someone that it was redundant. I
    am guessing--because I was not there--that they probably
    suspected that Ms. Schakowsky's concerns were already covered
    by these special circumstances provisions.
        I know that you feel that that provision is not adequate.
    Could you just elaborate on that?
        Mr. Rohrabacher. Well, I just, frankly, had my staff look
    this up and do an analysis for me, and they came to that
    conclusion that, no, they are not covered and they are not part
    of that category. Let me put it this way. When I got that
    report back, I was devastated.
        Mr. Keller. Right. What are you hearing--and this is to
    both of you--from your constituents about Reservists and
    Guardsmen being forced into bankruptcy by their call to active
    service?
        Ms. Schakowsky, maybe we will start with you.
        Ms. Schakowsky. Yes, we do hear about the financial
    problems of our service men and women. You know, we wanted to
    have veterans' service organizations to testify. We wanted to
    have that. But you know what? We identified some, and it is
    embarrassing. They felt embarrassed to come and talk about
    their personal financial problems.
        But there is no doubt that they exist, and, as I said, if
    you look at the front page of The Washington Post business
    section today, it talks about just how tough it really is for
    our returning National Guard and Reservists.
        Mr. Keller. So the problem is, in your observation, more
    widespread than most of us know because of the embarrassment
    that a lot of these folks do not come out and say how this is
    impacting them because they are----
        Ms. Schakowsky. Well, the other reason is because no
    records are actually being kept of that. So, while we know
    anecdotally and the veterans' service organizations know about
    it and our Department of Veterans Affairs knows about it, we
    actually do not have hard data to tell us that. So, you know,
    we do not know if it is 1,000 or 10,000. We know who these
    people are.
        Ms. Sanchez. Will the gentleman yield?
        Mr. Keller. Sure.
        Ms. Sanchez. In sort of setting up the two panels for
    today's hearing, we came to understand that when a debtor files
    for bankruptcy, there is no box that you check to identify
    yourself as a service member or not. So there is no particular
    way currently to keep those kinds of records, and I think,
    therefore, it is difficult for anybody to know how many people
    are affected.
        But we will be hearing from witnesses on the second panel
    much testimony about the members that it actually does affect.
        Mr. Keller. Right. Thank you.
        Mr. Rohrabacher. Well, if I could answer your question----
        Mr. Keller. Yes.
        Mr. Rohrabacher [continuing]. As well----
        Mr. Keller. And I will ask you what you are hearing
    anecdotally or statistically, whatever you heard.
        Mr. Rohrabacher. Right. Los Alamitos Reserve Center is in
    my district. Or, actually, it is on the edge of my district. It
    used to be in my district before redistricting. And many of the
    troops in Southern California, Reserves and National Guard
    troops, that have been away serving our country either deploy
    from Los Alamitos, or they come back to Southern California to
    Los Alamitos.
        I have made it my personal mission to go and see off every
    National Guard and Reserve unit that leaves from there that I
    can possibly do--it is part of my schedule if I am back there
    and not here in Washington--and to welcome them home as well,
    and so I have had a lot of interaction with Reserves and
    National Guard, and more than anything, you know, I have
    received the frustration of some of these people who are away
    from their families and while they are gone that their economic
    house is put in total disarray and they come back confused.
        They are frightened. They are frightened they are going to
    lose their home. Their whole life is different than it was a
    year before only because they have gone off and served their
    country, and just over and over again, I was told about this
    fear that they have, and that is why, as I say, when this
    motion to recommit came up originally--and there should be no
    doubt whether or not these people are put in an exceptional
    category. They should not be.
        And what is wrong with reaffirming if, indeed, they already
    are covered, which I do not believe they are? But if they are,
    if somebody says, ``Well, it can be argued that they are,''
    well, let's just reaffirm it. What is the problem? And as I
    say, that motion to recommit should have been accepted because
    if it was redundant, why not reaffirm it?
        Just like today, there is no reason not to reaffirm it
    because these people need to know that we care about them, and
    they need to know when they are coming back and their total
    life is in chaos compared to 2 years before that they are not
    going to have a hammer come down on their head, and whether it
    is 6 months or a year, we can talk about that, but that came to
    me. That was the most spoken not complaint, but concern of
    these people who were leaving and coming back, and as I say, I
    must have done this 30 times over the last 5 years.
        Mr. Keller. Well, Madam Chairman----
        Ms. Sanchez. The time of----
        Mr. Keller [continuing]. I know my time has expired, but if
    you would just indulge me for a few seconds, I just want to
    commend both of my colleagues for working on this very worthy
    task to protect the Reservists and Guardsmen and their
    families, and I appreciate your bipartisan spirit and will
    yield back the balance of my time.
        Ms. Sanchez. Okay. The gentleman yields back.
        Are there any other Members who wish to be recognized?
        Mr. Feeney?
        Mr. Feeney is recognized for 5 minutes.
        Mr. Feeney. I think I just have one question. Is there a
    time limit for a Reservist under your bill in terms of their
    ability to take advantage of the provisions of your bill, and
    what is it, a year or 5 years?
        Ms. Schakowsky. Actually, it is only 180 days, which was
    the essence of what Mr. Delahunt was saying, that, in his view,
    it may be too short. You know, it was written rather modestly,
    but they would be exempt from the test only in our bill for 180
    days, and so, you know, I actually would concur and it is
    certainly worth considering that when they come back, getting
    everything in order, 6 months may be, in fact, too short.
        Mr. Feeney. Well, I thought Mr. Delahunt's question--maybe
    I misunderstood it--went to the length of time of the 6-month
    average income requirement. Maybe I misunderstood.
        Ms. Schakowsky. Yes. No, I think he was referring to--am I
    right about that--how long a Reservist or National Guardsman
    coming back could avail himself of this kind of protection.
        Mr. Watt. If the gentleman would yield, that is what he
    intended, as he discussed with me before he left.
        Mr. Feeney. Well, that is what you get for asking questions
    that are over our head down here, but that is the only question
    I had.
        Thank you.
        Ms. Sanchez. The gentleman yields back his time.
        Does the gentleman----
        Mr. Franks. Let me indulge to just ask one very brief
    question.
        Ms. Sanchez. Procedurally, does the gentleman from Florida
    yield back the balance of his time?
        Mr. Feeney. I would yield to the Ranking Member, Mr.
    Franks.
        Ms. Sanchez. Thank you.
        Mr. Franks?
        Mr. Franks. Thank you, Mr. Feeney. Thank you very much.
        Just to touch briefly on the statement that I made related
    to the national security clearance, I am wondering if one or
    both of you might look into that to see if there is any way
    that we might make sure that we at least consider that
    possibility so that it does not do the harm that Mr. Cannon was
    concerned about. The concern is that----
        Mr. Rohrabacher. Certainly. And I do not know if that would
    be considered specifically germane to the bill or not because
    it might be from a different Committee or something like that.
    It might force this into another Committee.
        Ms. Sanchez. It is probably within the jurisdiction of the
    Armed Services Committee and not the Commercial and
    Administrative Law Subcommittee.
        Ms. Schakowsky. And the other thing about this is, look,
    those people who are forced into bankruptcy now are doing it
    under more adverse circumstances, but they are still being
    forced into bankruptcy. So they are losing their security
    clearance regardless under current circumstances. So this does
    not really change that in any way or exacerbate it any more
    than that. But, you know, so I think it is not necessarily
    relevant to this particular bill.
        Mr. Franks. Thank you, Madam Chair.
        I guess the only other thing that I would reiterate then is
    just it is difficult, but maybe we ought to talk about ways
    that we could work once again to help these service people in
    ways that might not, you know, include bankruptcy, but to still
    address the financial issue, and I know that the both of you
    are certainly inclined to that direction.
        Mr. Rohrabacher. I would certainly support any piece of
    legislation that you might want to bring up on that, and it
    probably would complicate this particular legislation because
    it would be sending it to different Committee jurisdictions.
        Mr. Franks. All right. Thank you, Madam Chair. I yield
    back.
        Mr. Johnson. Madam Chair----
        Ms. Sanchez. The gentlemen----
        Mr. Feeney. And I yield----
        Ms. Sanchez. The gentleman from Florida yields back his
    time.
        And at this time, the gentleman from Georgia, Mr. Johnson,
    is recognized.
        Mr. Johnson. Thank you, Madam Chair.
        I have been asked by the Chairman of the full Committee,
    the Honorable John Conyers, Jr., to have his written statement
    inserted into the record.
        Ms. Sanchez. Without objection, so ordered.
        [The prepared statement of Chairman Conyers follows:]
    Prepared Statement of the Honorable John Conyers, Jr., a Representative
      in Congress from the State of Michigan, Chairman, Committee on the
     Judiciary, and Member, Subcommittee on Commercial and Administrative
                                      Law

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Johnson. Thank you. I yield back.
        Ms. Sanchez. The gentleman yields back his time.
        I would like to thank our first panel of witnesses for
    their hard work on this very important piece of legislation. We
    appreciate your time and your staying to answer questions.
        And at this time, we will excuse our first panel, and we
    will take a brief recess to allow the second panel to come
    forward to the table.
        [Recess.]
        Ms. Sanchez. I am now pleased to introduce the witnesses
    for our second panel for today's hearing.
        Our first witness is Raymond Kelley. Mr. Kelley is the
    national legislative director for American Veterans, known as
    AMVETS, at the AMVETS National Headquarters in Lanham,
    Maryland. He is responsible for the planning, coordination, and
    implementation of AMVETS' relations with the United States
    Congress and Federal departments and agencies and other
    organizations. He develops and executes AMVETS Washington
    agenda in areas of budget, appropriations, health care,
    veterans' benefits issues, national security, and foreign
    policy. Mr. Kelley's work also includes building relationships
    with other non-profit organizations and developing plans to
    promote veteran transitions to civilian life after their
    service.
        Mr. Kelley served 6 years in the United States Marine
    Corps, he also served in the Army Reserve, and in April of
    2006, he was deployed to Iraq as the Psychological Operations
    Team leader. Mr. Kelley serviced for 12 months in the base of
    the Sunni-Shiite triangle and continues to serve in the Army
    Reserve.
        Welcome to you, Mr. Kelley.
        Our second witness is Jack Williams. Professor Williams
    serves as the Robert M. Zinman Resident Scholar at the American
    Bankruptcy Institute and was also the inaugural ABI Resident
    Scholar when the ABI endowment fund created the program in
    2001. As the ABI Resident Scholar, Professor Williams assists
    ABI with its educational programming and in its role as the
    authoritative source of bankruptcy information for the
    Congress, media, and public.
        Professor Williams teaches at Georgia State University
    College of Law. He instructs an assortment of courses on
    bankruptcy and taxation. He also teaches at the New York Law
    School LLM program in taxation, the New York University School
    of Law continuing professional education program, the Internal
    Revenue Service, and the Federal Law Enforcement Training
    Center.
        Welcome to you, Mr. Williams.
        Our final witness is Ed Boltz who appears on behalf of the
    National Association of Bankruptcy Attorneys, NACBA. Mr. Boltz
    is a member of the law offices of John T. Orcutt, P.C., where
    he represents clients in not only Chapter 13 and Chapter 7
    bankruptcies, but also in related consumer rights litigation,
    including fighting abusive mortgage practices.
        In addition to serving on the board of directors for NACBA
    where he is jointly responsible for directing the State chair
    program, Mr. Boltz serves on the Bankruptcy Council for the
    North Carolina Bar Association and previously served as the
    bankruptcy chair for the North Carolina Association of Trial
    Lawyers. Mr. Boltz moderated the panel Military Members Deep in
    Debt at the 2007 convention of NACBA.
        I would like to welcome you all here today.
        And at this time, I would invite Mr. Kelley to begin his
    testimony.

    TESTIMONY OF RAYMOND C. KELLEY, NATIONAL LEGISLATIVE DIRECTOR,
                           AMVETS, LANHAM, MD

        Mr. Kelley. Thank you, Madam Chair, Members of the
    Subcommittee. Thank you for inviting AMVETS to present our
    views today.
        Ms. Sanchez. Pardon me, Mr. Kelley. Is your microphone on?
        Mr. Kelley. Yes, ma'am.
        Ms. Sanchez. Can you move that a little bit closer?
        Mr. Kelley. Is this better?
        Ms. Sanchez. That is much better. Thank you so much. We
    will restart your time.
        Mr. Kelley. Thank you.
        Thank you, Madam Chair, Members of the Subcommittee, for
    holding this hearing today, and thank you for inviting AMVETS
    to present our views concerning H.R. 4044.
        I want to start by saying AMVETS wholly supports H.R. 4044,
    but it was not until after we had a long debate within our
    office on the substance of this bill. But, at the end of the
    day, we decided that it was better for the veterans, so we had
    to do it.
        My first reaction when I read this piece of legislation
    was: What does this say about our priorities as a Nation when
    the women and men of our National Guard and Reserve must have a
    provision enacted that will allow them to more easily file for
    bankruptcy if they have served on active duty? Why aren't we
    paying them enough to sustain their financial wellbeing? It was
    the basis of our debate. But, at the end of the day, we must do
    everything we can for our veterans and ease the pains of these
    noble citizens.
        Currently, there are 18,252 National Guard and 8,288
    Reserve members serving in Iraq, Afghanistan, and along our
    southern border in Operation Jump Start; 500,000 Guard and
    Reserve members have served in Iraq and Afghanistan since 2001,
    with 25 percent of those serving multiple tours. The Guard and
    Reserve was not developed to sustain this type of TEMPO, and it
    has only placed a greater burden on those who have served.
        In my written testimony, I have provided a couple of tables
    to provide insight on the income deficits that the National
    Guard and Reserve face, and I put in there what Reserve members
    would receive if they lived in Illinois in the Springfield area
    and they deployed to Iraq, and it was about $47,000 a year. Now
    that did not include the combat pay and the tax breaks that
    they receive, which ends up being about $4,700 per year. But,
    at the end of the day, it is still about $10,000 less than what
    a person in Illinois would make on average with the same amount
    of time and service as in their civilian employment. So we are
    still $5,000 to $6,000 short on that deficit.
        And those who serve stateside in support roles and those
    who are serving along the southern border do not receive the
    benefit of that combat pay or the incentive of the tax
    exemption. This adds only to the financial hardship. The fact
    is that these 1-year tours generally end up being 16 months to
    24 months, and during the time that they are mobilizing, they
    do not receive that combat pay or the tax incentive.
        I will use myself as an anecdotal case. I served in Iraq. I
    started in April of 2006, but I started training to go to Iraq
    in November of 2005. So 5 months prior, I was committed to
    serving with the Army Reserve before I left and did not receive
    the incentive pay. And if I had to redeploy today, I would have
    to take an equity loan on my home to make sure that my family
    stayed at the same financial status and paid their bills, to
    sustain their way of life.
        This financial hardship does not stop when they return.
    Many of these National Guard and Reservists are either full-
    time or part-time students and are trying to support a family,
    and when they leave to go on active duty, they have to
    disenroll from school and leave these part-time jobs, and when
    they return, they have to find new jobs and re-enroll to
    unsympathetic universities and employers. So it sets them back.
    These members have to pay to re-enroll to the same school that
    they were in, and then they have to reapply for the G.I. bill
    which can take 3 months before they start getting paid again.
        And many employers do not understand or adhere to the
    USERRA laws, making it difficult for Guard and Reserve members
    to return to the jobs that they have left. USERRA is in place
    to protect Guard and Reserve members from discrimination while
    they serve, but a 2002 report showed that USERRA violations
    increased by 35 percent in 2002 and each year subsequent after
    that, there has been a 10 percent increase.
        It is important to do everything we can to protect and
    support our Guard and Reserve, and that is why AMVETS asks this
    Subcommittee to act positively on H.R. 4044.
        And that concludes my testimony. I will be happy to answer
    any questions.
        [The prepared statement of Mr. Kelley follows:]
                    Prepared Statement of Raymond C. Kelley

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Ms. Sanchez. Thank you, Mr. Kelley. We appreciate your
    testimony.
        At this time, I would invite Professor Williams to proceed
    with his testimony.
        Can you----
        Mr. Williams. Excuse me. Thank you very much.
        Ms. Sanchez. There we go.

     TESTIMONY OF JACK F. WILLIAMS, SCHOLAR-IN-RESIDENCE, AMERICAN
                  BANKRUPTCY INSTITUTE, ALEXANDRIA, VA

        Mr. Williams. Madam Chair, Members of the Subcommittee, my
    name is Jack Williams, and it is a pleasure and honor to be
    here before you all today. As mentioned, I am a professor of
    law at Georgia State University College of Law in Atlanta,
    Georgia, and also the Robert M. Zinman American Bankruptcy
    Institute Scholar-in-Residence.
        Today's subject is not new to me. For over 20 years now, I
    have devoted time to military personnel issues, including debt,
    payday loans, credit counseling, bankruptcy, and security
    clearance issues. Along with a colleague of mine, Susan Seabury
    of BDO Seidman, and a number of volunteer law students, I have
    represented on a pro bono basis several service members, mostly
    from the Georgia and the Southeastern Region, with serious and
    pressing financial issues. Recently, along with Ms. Seabury, I
    completed a research project and report on Debt, Bankruptcy and
    the Servicemember Civil Relief Act, which will be published by
    Norton's Annual Survey of Bankruptcy Law.
        What I would like to do today is use my time to describe
    the scope of the legislation that is pending, how the
    bankruptcy process works with service members without the
    legislation, how it would work with the legislation, and then
    talk very briefly on some of the consequences of financial
    distress that our service members experience, including things
    like the potential possibility of criminal sanctions under the
    Uniform Code of Military Justice where the loss of security
    clearance is associated with not aggressively managing one's
    financial situation.
        When we look at the scope of the legislation, we see that
    it is targeted, specific, and quite modest. In fact, it is very
    much an extension of what already exists under section 707 of
    the Bankruptcy Code. In particular, we already exempt from the
    presumption of abuse disabled veterans, but we would be
    essentially extending that exemption from the presumption of
    abuse of the bankruptcy process, which we commonly refer to as
    the means test. We would exempt that presumption of abuse in
    the context of activated Reservists and National Guardsmen,
    clearly the citizen soldiers of this country that we are
    talking about today, and there is a very short time window, a
    6-month time window from their leaving active duty, that they
    could take advantage of this particular provision.
        So we are talking about in the language itself very limited
    scope in its application, modest and targeted to address a
    particular issue, as the financial distress that is caused in
    part by activation of citizen soldiers for an extended period
    of time.
        The other point I would like to make is that based on the
    most recent data, which would be about 2004 in a study by the
    Department of Defense, we see about 16,000 service member
    bankruptcy filings a year. That number has not been rolled
    forward to the present time period, but if one were to use the
    percentages that existed in 2004 and rolled it forward, we
    would probably be looking at somewhere between 18,000 to 20,000
    bankruptcy filings by active duty service members.
        Of that amount, there would be a smaller amount that would
    probably refer to Reservists and National Guardsmen, and we
    could estimate somewhere between 2,000 to 2,500 members that
    might be affected, Reservists and National Guardsmen, that may
    seek relief under this particular provision. And we might think
    that is not a very big number in the scheme of things, but, as
    my father taught me, sometimes it is the quality and not the
    quantity, that it is magnitude and not the quantity, and so
    there is a question of numbers that in the absolute or even
    relatively speaking might be very small, nonetheless, would be
    very important.
        Now the way the means test works right now is that if
    someone's income is below the median income for that State, the
    means test will not apply. If it does apply, however, then the
    burden is upon the service member to rebut that presumption. If
    he rebuts that presumption, he has to do it usually in sworn
    testimony based on the facts and circumstances.
        What this legislation would do is change that. The
    presumption would be not of abuse. The presumption would be
    that they would be eligible for the relief they sought, and if
    abuse was present, then the United States Trustee or another
    watchdog could challenge it and, ultimately, based on the facts
    and circumstances of each individualized case, can make a
    determination of whether the service member has abused the
    bankruptcy process. That does not change by the enactment of
    this particular bill.
        I see I am out of time. Thank you very much.
        [The prepared statement of Mr. Williams follows:]
                     Prepared Statement of Jack F. Williams

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Ms. Sanchez. Thank you for your testimony.
        At this time, I would invite Mr. Boltz to proceed with his
    testimony.

       TESTIMONY OF EDWARD C. BOLTZ, THE LAW OFFICES OF JOHN T.
    ORCUTT, P.C., DURHAM, NC, ON BEHALF OF THE NATIONAL ASSOCIATION
                    OF CONSUMER BANKRUPTCY ATTORNEYS

        Mr. Boltz. Chairwoman Sanchez and Members of the
    Subcommittee, I thank you for inviting me to speak before you
    on H.R. 4044, which would exclude Reservists and military
    National Guard members serving on active duty from the means
    test under the Bankruptcy Code.
        As a consumer bankruptcy attorney in North Carolina, I have
    the privilege of representing military service members from the
    Fort Bragg area as well as Reservists and National Guards
    throughout serving from North Carolina. I have also had the
    privilege of speaking on military matters previously and have
    some acquaintance with the security issue that Mr. Franks has
    raised also.
        The means test, as enacted by the Bankruptcy Abuse and
    Consumer Protection Act of 2005, enacts some mechanical
    calculation of a debtor's ability to repay their debt and
    whether they are entitled to a discharge in Chapter 7 and, if
    they are in a Chapter 13 bankruptcy, how much they are required
    to pay to their creditors in that case.
        The starting point for this mechanical calculation is what
    is called their current monthly income. This is a historical
    amount which looks at the 6 months preceding the filing of the
    bankruptcy to determine what the debtor's income is going
    forward for their bankruptcy case, either Chapter 7 or Chapter
    13.
        Because of the nature of military service, upon returning
    from overseas, a service member is likely to face not only a
    loss of their military income, which is heightened in cases
    where they served in a combat zone by not only their imminent
    hazard pay, but also by a family separate allowance, and also
    basically a cashout for a per diem allowance for their daily
    pay of about $3.50 over a 15-month period of time. That is
    almost $1,600, however.
        These amounts heighten a debtor's current monthly income
    which bears no relation to their actual income upon return home
    which may be less, it may be more, it may be nothing based on
    their work situation. They, nonetheless, face difficulties with
    the bankruptcy. They would be subject to a presumption of abuse
    or a requirement that they pay that money which does not
    actually exist in the Chapter 13 case.
        In some cases, this has caused clients of mine to have to
    wait for a period of as long as 6 months to file a bankruptcy.
    In some circumstances, this involves just gritting their teeth
    and getting through 6 months of phone calls and collection
    attempts from their creditors. Where the debtor is facing
    foreclosure, repossession, or garnishment of their wages, this
    is time that they cannot wait, however, and the peculiarities
    of the means test are not something they can wait to sort
    themselves out.
        This is particularly true for those in the military who not
    only face the normal debt collection difficulties, but they
    face possible court martial under the Uniform Code of Military
    Justice for dishonorably failing to pay their debt and also
    threats of loss of security clearance.
        These are problems that exist regardless of the bankruptcy
    and, in many instances, the bankruptcy prevents these problems.
    Routinely, we have soldiers--and I say soldiers, but this would
    true for all branches of the military--where their commanding
    officers have, in fact, advised them to file bankruptcy to
    avoid prosecution or other disciplinary problems.
        We believe that H.R. 4044 is a very narrow and modest
    approach to this problem. It is similar to the approach taken
    for disabled veterans that Representative Rohrabacher mentioned
    previously, and military Reservists would still be subject to
    court review under a totality of the circumstances, tests in
    the Bankruptcy Code, and in a Chapter 13, they would still be s
    subject to a good faith test that their case was filed in good
    faith and they were making an attempt to repay their debt in an
    appropriate manner, returning them, in effect, to the pre-2005
    statue.
        Lastly, at a time of war, H.R. 4044 would further the
    laudable and important goals of the Servicemembers Civil Relief
    Act, which provides for strengthening and expediting the
    national defense, by removing this as a distraction for our
    service members and removing it from the calculus in deciding
    whether they can afford to serve.
        Thank you for your time.
        [The prepared statement of Mr. Boltz follows:]
                     Prepared Statement of Edward C. Boltz

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Ms. Sanchez. Thank you, Mr. Boltz.
        We will now begin with questioning, and I will begin by
    recognizing myself for 5 minutes.
        Mr. Kelley, we tried to have a member of the National Guard
    or the Reserve to testify at today's hearing, but we
    encountered a high degree of reluctance to do so. Can you
    explain to us why that was so?
        Mr. Kelley. I ran into the same problem. After I found out
    that your office was having a difficult time finding someone, I
    put a search out, and I think you would find it in any segment
    of society, it is not just exclusive to people in the military,
    that admitting your financial difficulty in a public forum is
    very difficult, and you do not want that to be part of the
    public record. I would assume that you would want to secretly
    put all of this behind you and try to move forward. So
    rehashing it or making it on a public forum would be very
    difficult.
        Ms. Sanchez. Right. We actually encountered in another
    hearing that we did on USERRA in another Subcommittee that I
    serve--the difficulty of people not wanting to malign the
    military or say anything that might be construed as maligning
    the military and a huge degree of reluctance on the part of
    service members who are experiencing financial difficulty to
    actually talk in an open forum about it.
        Professor Williams, Bankruptcy Code section 707(b)(2)(D)
    already provides an exception to the means test for a disabled
    veteran whose indebtedness was primarily incurred while on
    active duty, and as you stated, H.R. 4044 would just add a
    further limited exception for certain qualifying members of the
    National Guard and the Reserve. Do you see any reason why this
    further exception could be problematic by extending it to these
    Reservists?
        Mr. Williams. No. The proposal is a modest extension of
    existing law and would be consistent with the general structure
    of the means test and the presumption of abuse, the totality of
    circumstances test, and finding abuse would be consistent and
    in harmony with most provisions of the Bankruptcy Code as well
    as the Servicemembers Civil Relief Act.
        Ms. Sanchez. And because we are dealing with presumptions,
    there still is discretion on the part of a bankruptcy judge to
    look at a case and find that there is, in fact, any kind of
    abuse, even though this exemption would exist presumably if we
    enacted it.
        Mr. Williams. Absolutely. In fact, failing the means test
    that otherwise would not apply could be a factor that a court
    considers under the totality of the circumstances. It just
    means that the presumption is not a presumption against the
    service member. The presumption would be the presumption in
    favor of the service member seeking relief, and it would be
    incumbent on any party and interest to challenge the debtor's
    eligibility to proceed under Chapter 7.
        Ms. Sanchez. Thank you.
        Mr. Boltz, you assert that the means test presents
    particular difficulties for members of the military who have
    received combat pay. Why can't the service member simply
    explain that his or her temporary receipt of a higher income is
    a special circumstance?
        Mr. Boltz. Chairwoman Sanchez, they can do that. One of the
    difficulties with that is that it is both an unpredictable
    outcome and a costly outcome. It is unpredictable in terms that
    the service member would have the burden of rebutting the
    presumption which is not something taken lightly by courts and
    would place the burden on someone who has already borne a
    burden overseas for this Nation. And it would be costly both in
    terms of additional costs for paying their attorney for this
    representation and also in terms of their time spent in the
    hearings that would ensue on this.
        In special circumstances, the case law that has developed
    since 2005 on this has held that it is a very high standard for
    special circumstances, not something that can be rebutted
    easily, and this would entail, in my experience, a hearing that
    would last the better part of a day for a debtor which, again,
    dovetails with what Mr. Kelley previously testified, which also
    carries with it the stigma and embarrassment that someone would
    have.
        When people file for bankruptcy, one of the main things
    they look to me as their attorney for is to tell them what is
    going to happen, and, right now, when it comes to this sort of
    thing, I can tell them, you know, ``You are throwing yourself
    on the mercy of a court,'' which is not a palatable answer.
        Ms. Sanchez. Not a very pleasant thing to do.
        H.R. 4044 is the bill that has been proposed, and it is
    limited to members of the National Guard and the Reserve. Do
    you think it should apply to other members of the military?
        Mr. Boltz. I do think that other members of the military
    who have returned from combat duty face similar difficulties
    with this. So I would urge the Committee to consider that. That
    would be a vast expansion of what is right now a pretty narrow
    bill because, again, upon returning from active combat duty in
    Iraq or Afghanistan or other combat zones, a regular military
    service member would face a reduction in their income, and for
    a period of 6 months, that would prejudice them in a bankruptcy
    proceeding, but, you know, with this narrow bill as it is, I
    believe it is appropriate.
        Ms. Sanchez. Thank you, Mr. Boltz.
        My time has expired.
        At this time, I would recognize the gentleman from Arizona,
    Mr. Franks, for 5 minutes.
        Mr. Franks. Well, thank you, Madam Chair.
        I thank all of you for being here today.
        Mr. Boltz, I am really impressed with your knowledge here.
    All of you. But I do not even think you read your statement,
    did you?
        Mr. Boltz. No, I did not, sir.
        Mr. Franks. Yes, sir. Well, some of us have to have a
    script for everything.
        Some argue that the means test already gives a break to
    those who are earning less than the applicable State median
    income and those in special circumstances. If that is the case,
    isn't this bill potentially aimed at benefiting the wealthier
    Reservists and the Guardsmen who do not present special
    circumstances, like the colonels and not the privates, and do
    we take that into account.
        And, Mr. Boltz, I will----
        Mr. Boltz. Mr. Franks, it is true that in a Chapter 7
    proceeding, those who are below the State median income are not
    subjected to the means test. They are still subjected to the
    totality of the circumstances abuse case which would be the
    same following this amendment.
        However, in a Chapter 13 proceeding, debtors are subject to
    the means test whether they are above or below the median
    income because this means test is what is used to determine how
    much a debtor has to pay to their unsecured creditors in a
    Chapter 13 case. And for many service members who are
    returning, if they are facing foreclosure or repossession of a
    car, Chapter 7 does not stop those proceedings, would not save
    their home or their car, and they are forced to turn to Chapter
    13.
        And that is where more and more debtors, particularly in
    the current economy, including military debtors, are forced to
    go, and even when they are below that median income, the
    amendment would protect them from having to pay income that
    they no longer have.
        Mr. Franks. Sometimes, you know, we forget to ask a salient
    question. If you were trying to improve this legislation or if
    you could do one thing to address the underlying purpose of the
    legislation, what would you do to make it better? Do you have
    any thoughts about how we could either improve this legislation
    or to address the soldiers' issues in a better way?
        And, Professor Williams, I might ask you first and let the
    others address it as they will.
        Mr. Williams. Thank you, Mr. Franks.
        We should recognize that any bankruptcy answer is the
    second best solution, that it only applies after service
    members are in financial distress--and serous financial
    distress--so that any modification to the Bankruptcy Code only
    solves a very small problem of what is a much larger problem.
        The much larger problem here is military personnel debt
    load, and we are talking about a very large problem. Fifty-six
    percent of enlisted military personnel report difficulty with
    family finances, and 47 percent of service members say they are
    in over their head with their own expenses.
        Now this is a modest proposal, but I would suggest that we
    think broader at some particular point in time and look at the
    overall problem that service members face in regard to
    financial debt. Congress has done a number of things, amending
    the Servicemembers Civil Relief Act, capping the interest rate
    on payday loans, a number of things, and is moving, I think, to
    a more holistic and robust view.
        I would applaud what Congress has done in the past and
    suggest that that is the appropriate road and the long-term
    road to resolve the issues of financial distress and the
    negative consequences, not only the human toll, but the toll on
    one's profession because there are serious security clearance
    consequences associated with financial distress in the military
    that may foreclose one's career and service in the military as
    well.
        Mr. Franks. Mr. Kelley, do you have any thoughts there?
        Mr. Kelley. Yes. About the first question, I do not think
    anybody in the military would abuse this because of the fact of
    what we mentioned about the security clearances and how it will
    affect their career. And the only people that could really
    abuse it, in my estimate, are officers and higher enlisted
    people who have decided to make this a career. So they would,
    in essence, be ending their career to file for bankruptcy,
    especially if it was unneeded.
        To improve this bill, I think the only thing that I would
    consider, because I like the narrow scope of it, is active duty
    military personnel who have been extended to go to Iraq or
    Afghanistan, and when they come back, they are immediately
    separated. So they are, in essence, unemployed when they return
    to the United States and have not had a chance to look for
    employment, look to get into a college, to do all the things
    that the rest of us do to network when we move from one career
    field to another. That opportunity is not afforded to them. So
    I would consider adding those who are separated immediately
    from active duty to this bill.
        Mr. Franks. Thank you, Madam Chair.
        Thank you, all of you.
        Ms. Sanchez. Mr. Boltz, did you want to respond to that
    question?
        Mr. Boltz. I would just second Mr. Delahunt's suggestion
    that perhaps it be extended from 180 days to 1 year for both
    technical reasons. Strictly speaking, the means test does not
    look at the last 6 months. It looks at the last 6 months
    preceding the filing. So if you file a case on the last day of
    a month, say you filed yesterday, it would not look at 6 months
    before March 31, it would look at February, January, December
    and back for 6 months. And also for practical reasons, someone,
    as was just stated, leaving the military, it takes a little
    while to get back on your feet and get, I guess, your land legs
    back under you under civilian law.
        Ms. Sanchez. Yes, I noticed some head-shaking. Mr. Kelley
    and Mr. Williams, do you agree with the suggestion of extending
    that to 1 year?
        Mr. Kelley. AMVETS would agree.
        Mr. Williams. Personally, I would agree with that
    suggestion.
        Ms. Sanchez. Thank you.
        The gentleman's time has expired.
        At this time, I would recognize Mr. Johnson for 5 minutes
    for questions.
        Mr. Johnson. Thank you, Madam Chair.
        Professor Williams, last October, this Subcommittee
    conducted an oversight hearing on the United States Trustee
    program, and according to Director Cliff White's testimony,
    approximately .63 percent of consumer cases are ultimately
    dismissed for abuse under the new means testing criteria. This
    means that well less than 1 percent of Chapter 7 cases are
    dismissed for abuse, even though proponents of these reforms
    claimed that the percent was likely to be 10 times higher.
    Given the complexity and cost of implementing the means test,
    what value does it actually provide?
        Mr. Williams. As a general question, it provides, I think,
    two things.
        Primarily, it is a statement to the government that those
    who have the ability to pay substantial amounts of future
    income to reduce the significant portion of debt should do so
    and that the government has identified that as a good.
        And, second, it suggests to those who are contemplating
    bankruptcy that may tend toward abuse that this will not be a
    welcome forum or venue and, therefore, the number, although it
    may be perfectly accurate, may actually undercount potential
    abusers who believe that they will be ferreted out and caught
    if they file a bankruptcy petition and purport to abuse the
    system.
        Whether that, in fact, outweighs the increased level of
    complexity and cost that a large number of people have to incur
    is another question, and whether government should in drafting
    legislation of a remedial nature should presume for any section
    of its citizenry abuse is also another question. But I think
    there are some advantages, there are some benefits, to a means
    testing mechanism. Whether this is the right way is subject to
    debate based on its complexity and increased costs and the
    results that you have identified.
        Mr. Johnson. Mr. Boltz, what would be your response?
        Mr. Boltz. In regards to the benefits that the means test
    provides?
        Mr. Johnson. Yes.
        Mr. Boltz. From my clients' point of view and from mine,
    the main benefit that has resulted from the means test is that
    most of my clients, again, look to me for predictability, and
    this provides a means where I can tell them, you know, largely
    what will happen to them in their bankruptcy case by using a
    standardized mechanical test. It is harsh on many people who do
    not fit that test, and it also requires people not to be able
    to file perhaps when they need to. They may have to wait for
    after a deployment or after their unemployment has lasted a
    period of time.
        Mr. Johnson. It actually increases the attorneys' fees that
    are charged to people who would otherwise be looking to file a
    Chapter 7, and it thrusts probably more people into pro se
    status trying to file Chapter 7s. Would you agree to that?
        Mr. Boltz. I would agree. I would agree with both the
    attorney fees and, anecdotally, I will say there are more
    people who file pro se Chapter 7s, yes.
        Mr. Johnson. And do you agree, Professor Williams, as well?
        Mr. Williams. Yes, I do on both points.
        Mr. Johnson. Yes. How long would it take a pro se debtor to
    complete means test form 22, which consists of 52 sections?
        Mr. Boltz. Well, with the assistance of counsel, you----
        Mr. Johnson. Well, I mean, a pro se----
        Mr. Boltz. A pro se debtor----
        Mr. Johnson. A pro se without assistance.
        Mr. Boltz. Without assistance, I would honestly say that
    many would not be able to complete it. For me to do it, it
    requires a computer program because the numbers shift as they
    adjust. So, for a pro se debtor, it would take probably 10 to
    12 hours, I would expect, to gather the information and
    complete that based on the amount of time it takes with my
    assistance. On every case, we probably spend upward of two to 3
    hours completing it.
        Mr. Johnson. Okay.
        Professor Williams?
        Mr. Williams. I would agree with that assessment. It is a
    complex process.
        Mr. Johnson. So, given the fact that only 1 percent or less
    than 1 percent of the filings result in a dismissal based on
    abuse, it just appears that this means test may not be a good
    thing, especially for our service men and women who are both
    active duty as well as Reserve and National Guard who come back
    and are separated and then encounter financial problems based
    on their being deployed.
        So I know we are not going that far with this limited
    proposal here, but this limited proposal seems to certainly
    provide some relief to a key constituency that needs
    protection. So thank you.
        Ms. Sanchez. The time of the gentleman has expired.
        Mr. Keller is recognized for 5 minutes for questions.
        Mr. Keller. Thank you, Madam Chairwoman.
        Professor Williams, you teach bankruptcy law. Is that
    right?
        Mr. Williams. That is correct.
        Mr. Keller. Mr. Boltz, you are a practicing bankruptcy
    lawyer?
        Mr. Boltz. That is correct.
        Mr. Keller. Were you both here for the testimony of
    Congressman Rohrabacher?
        Mr. Boltz. Yes.
        Mr. Williams. Yes.
        Mr. Keller. You may recall him saying that he felt he was
    misinformed when he was told by someone that essentially the
    provisions that this bill has are not needed because they are
    redundant, and I imagine what he meant by that is it was
    already covered by the special circumstances provision. Do you
    recall that?
        Mr. Boltz. That is what I understood him to say.
        Mr. Keller. Well, as a practicing bankruptcy lawyer and a
    bankruptcy professor--and we will start with the lawyer--give
    us on this Committee an idea as to why the service men exempted
    by this legislation do not already qualify for relief under the
    means test special circumstances provision.
        Mr. Boltz. Under the means test special circumstances
    provision that would be used by someone in a Chapter 7 case to
    rebut the presumption of abuse that had arisen because they had
    failed the means test in essence under 707(b)(2), the
    difficulty that that presents is that it, as I said earlier,
    again turns that case back to the bankruptcy judge on a
    subjective basis to determine the military debtor's
    circumstances and what their ability to pay would be based on
    their previous income.
        Mr. Keller. You are concerned that the judge would not rule
    favorably for the Reservists or Guardsmen under this objective
    test?
        Mr. Boltz. In my experience, the bankruptcy judges I appear
    in front of in North Carolina, which are several, have
    obviously shown a great deal of deference and concern for
    military debtors in the past. They are a heroic segment of our
    society, and they have gotten that deference.
        But even if there were a finding that there were special
    circumstances that justified a bankruptcy discharge, it is
    nonetheless a grueling proceeding. Generally, I have not faced
    one on this issue because we have----
        Mr. Keller. You say a grueling procedure, like a day-long
    evidentiary hearing?
        Mr. Boltz. A day-long evidentiary hearing and also
    substantial pretrial discovery on this. And the court officials
    who are in essence the prosecutors, whether it is the U.S.
    Trustee or North Carolina where we have the bankruptcy
    administrators, they do not generally just stick to the issue
    of you are in the military. They dig into every aspect of the
    debtor's finances.
        Mr. Keller. So, while the Reservists or Guardsmen may
    ultimately prevail in front of a sympathetic bankruptcy judge,
    they would incur substantial litigation costs and attorneys
    fees by going through the process of proving that they qualify
    for the special circumstances?
        Mr. Boltz. Yes. And, again, both the litigation costs and
    the time for themselves, which, again, as they are trying to
    get back on their feet and find their way back into civilian
    society is something that they can ill afford.
        Mr. Keller. I see.
        Professor Williams, do you have anything to add as to why
    the special circumstances provision is inadequate under the
    circumstances to protect the Reservists and Guardsmen?
        Mr. Williams. I would add that from a descriptive
    perspective that these situations present themselves while a
    Reservist or a Guardsman is actually on active duty. That would
    require, in some instances, courts conducting a telephonic
    hearing with service members stationed in Iraq or Afghanistan
    or other areas across the world. That adds to the complexity of
    the determination under the totality of circumstances test,
    notwithstanding the special exception.
        Mr. Keller. Okay. Mr. Kelley, do you have a sense of how
    many Reservists and Guardsmen are facing insolvency by their
    calls to active service?
        Mr. Kelley. The National Guard put out an estimate that 40
    percent of all Guardsmen are in some sort of financial
    hardship. To what degree, they do not describe, but----
        Mr. Keller. Let me fire off a quick question before my time
    expires to you again, Mr. Kelley. I heard you mention something
    about concerns about veterans coming back from Iraq and
    Afghanistan being able to go to college and having other
    similar opportunity. Is it your view that we should somehow
    update or expand the G.I. bill to provide for more generous
    college opportunities, and if that is your view, do you want to
    tell us any specific bills or proposals you think that Congress
    should put on the front burner?
        Mr. Kelley. Yes. AMVETS wholly supports S. 22, Senator
    Webb's post-9/11 G.I. bill reform.
        Mr. Keller. Thank you, Mr. Kelley.
        My time has expired.
        Ms. Sanchez. The time of the gentleman has expired.
        Mr. Watt is recognized for 5 minutes for questions.
        Mr. Watt. Thank you, Madam Chair.
        And let me start by just saying to Mr. Kelley, I can
    understand the vexing that AMVETS had to go through about this.
    We share those concerns that service people should not be in
    the position of having to deal with this, but, unfortunately,
    that is not currently the case. So I applaud your decision to,
    after going through that debate internally, provide your
    support for the bill.
        In addition to Mr. Delahunt's comment about extending the
    term to a year at least or more or something longer than 6
    months, certainly, the one concern I expressed about the bill
    was that it does not seem appropriately titled. I hope that
    Professor Williams and Mr. Boltz will take a close look at the
    way the bill is described.
        I do not think it was the actual body of the bill itself
    accomplishes what I think was intended, but the way it is
    described to create an exemption from the means test I do not
    think is the appropriate thing that we are doing because the
    means test is a good thing and we are not trying to exempt
    people from it. We are trying to give them a benefit of it,
    regardless of their income levels, as I understand it.
        So we need a better description for the bill in the
    preamble, I guess, it would be or in the title to the bill, and
    I hope you will give us some suggestions on that. I do not
    expect you to do that. I know you did not come to talk about
    the packaging today. You came to talk about the substance, but
    it does need to be packaged correctly, too, and titled
    correctly, and both Mr. Rohrabacher and Ms. Schakowsky
    acknowledged, after I raised the issue with them, that they do
    not have a good title for the bill, and so if you all could
    help us with that, I think that would be non-controversial in a
    markup of the bill, as might extending the term from the 6-
    month term to 12 months.
        Other than that, I think the bill is fine and appreciate
    your all's support and input, and I am hopeful that this is
    something that we can do on a bipartisan basis and help our
    service people. And then we can turn our attention to the real
    problem, which is trying to solve their financial issues that
    will prevent them and others from getting into situations where
    they have to pursue this last resort, bankruptcy.
        I heard Professor Williams' comment that when you are here,
    you have already reached the end of the road and we need to try
    to prevent more people from being here and reaching the end of
    the road, service people and non-service people, and we are
    trying to address a number of those issues as we go forward.
        So thank you. I did not ask any questions. I just made my
    opening statement, I guess. But if you all have got a question
    that you want to answer, I will give you the rest of my time to
    answer it or I will yield it back.
        Ms. Sanchez. Any takers?
        Mr. Watt. In that case, I yield back.
        Ms. Sanchez. The gentleman yields back the balance of his
    time.
        I want to thank the witnesses for their testimony today.
        Without objection, Members will have 5 legislative days to
    submit any additional written questions which we will forward
    to the witnesses and ask that you answer as promptly as you can
    so that they can be made a part of the record.
        Without objection, the record will remain open for 5
    legislative days for the submission of any additional
    materials.
        Again, I want to thank everybody for their time and their
    patience, and this hearing of the Subcommittee on Commercial
    and Administrative Law is adjourned.
        [Whereupon, at 3:34 p.m., the Subcommittee was adjourned.]
                                A P P E N D I X

                                  ----------

                   Material Submitted for the Hearing Record

    Answers to Post-Hearing Questions from the Honorable Janice Schakowsky,
            a Representative in Congress from the State of Illinois

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Answers to Post-Hearing Questions from the Honorable Dana Rohrabacher,
           a Representative in Congress from the State of California

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

           Answers to Post-Hearing Questions from Raymond C. Kelley,
               National Legislative Director, AMVETS, Lanham, MD

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

      Answers to Post-Hearing Questions from Jack F. Williams, Scholar-in-
            Residence, American Bankruptcy Institute, Alexandria, VA

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

      Answers to Post-Hearing Questions from Ed Boltz, the Law Offices of
    John T. Orcutt, P.C., Durham, NC, on behalf of the National Association
                        of Consumer Bankruptcy Attorneys

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]