[Congressional Record Volume 154, Number 106 (Wednesday, June 25, 2008)]
[Senate]
[Pages S6166-S6167]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      BY Mr. DURBIN:
  S. 3197. A bill to amend title 11, United States Code, to exempt for 
a limited period, from the application of the means-test presumption of 
abuse under chapter 7, qualifying members of reserve components of the 
Armed Forces and members of the National Guard who, after September 11, 
2001, are called to active duty or to perform a homeland defense 
activity for not less than 90 days; to the Committee on the Judiciary.
  Mr. DURBIN. Mr. President, when our National Guard and Reserve 
members return from active duty, the last thing they should have to 
worry about is struggling to catch up on the bills. Sadly, acute 
financial challenges are often exactly what greet our bravest men and 
women when they come home.
  For those families who are struggling to make ends meet after serving 
our country, today I am introducing a bill, the National Guard and 
Reservists Debt Relief Act, that would give these families a little 
breathing room. My bill would waive the means test for entering into 
Chapter 7 bankruptcy protection for National Guard and Reserve members 
who have served since September 11, 2001. The bill would give these 
families a little more time to reorganize their finances so that they 
can get their lives back in order after serving.
  The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act 
changed the U.S. bankruptcy code to make it significantly harder for 
individuals to receive protection from their creditors via bankruptcy, 
by requiring filers to pass a means test based on an individual's 
income and expenses for the 6 month period preceding a bankruptcy 
filing.
  My bill would exempt returning Guard and Reserve members from this 
means test, both because our finest men and women deserve greater 
financial protection and because they are uniquely disadvantaged by the 
means test criteria. Despite receiving much-deserved active duty pay 
for their service, National Guard and Reserve members often take a pay 
cut when they leave their jobs for a deployment. But because the means 
test includes the past 6 months of income in its calculation, men and 
women with little current income may not qualify for bankruptcy 
protection.
  This is an issue that will become increasingly important in my home 
state of Illinois. The Illinois National Guard is preparing for the 
largest deployment of soldiers since World War II, with more than 2,700 
currently training for deployment to Afghanistan. For the men and women 
in this group who find themselves in unfortunate financial 
circumstances when they return home, particularly if our economy 
continues to slow, this bill would help by allowing these men and women 
to file for bankruptcy if they desperately need that help.
  I am pleased that the House version of this legislation, championed 
by my good friend Representative Jan Schakowsky, passed the House by 
voice vote earlier this week. I urge my Senate colleagues to support 
this bill just as strongly.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
placed in the Record, as follows:

                                S. 3197

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``National Guard and 
     Reservists Debt Relief Act of 2008''.

     SEC. 2. AMENDMENTS.

       Section 707(b)(2)(D) of title 11, United States Code, is 
     amended--
       (1) in each of clauses (i) and (ii)--
       (A) by indenting the left margins of such clauses 2 ems to 
     the right; and
       (B) by redesignating such clauses as subclauses (I) and 
     (II), respectively;
       (2) by striking ``if the debtor is a disabled veteran'' and 
     inserting the following:

     ``if--
       ``(i) the debtor is a disabled veteran'';
       (3) by striking the period at the end and inserting ``; 
     or''; and
       (4) by adding at the end the following:
       ``(ii) while--
       ``(I) the debtor is--
       ``(aa) on, and during the 540-day period beginning 
     immediately after the debtor is released from, a period of 
     active duty (as defined in section 101(d)(1) of title 10) of 
     not less than 90 days; or

[[Page S6167]]

       ``(bb) performing, and during the 540-day period beginning 
     immediately after the debtor is no longer performing, a 
     homeland defense activity (as defined in section 901(1) of 
     title 32) performed for a period of not less than 90 days; 
     and
       ``(II) if, after September 11, 2001, the debtor while a 
     member of a reserve component of the Armed Forces or a member 
     of the National Guard, was called to such active duty or 
     performed such homeland defense activity.''.

     SEC. 3. GAO STUDY.

       (a) Comptroller General Study.--Not later than 2 years 
     after the effective date of this Act, the Comptroller General 
     shall complete and transmit to the Speaker of the House of 
     Representatives and the President pro tempore of the Senate, 
     a study of the use and the effects of the provisions of law 
     amended (and as amended) by this Act. Such study shall 
     address, at a minimum--
       (1) whether and to what degree members of reserve 
     components of the Armed Forces and members of the National 
     Guard avail themselves of the benefits of such provisions,
       (2) whether and to what degree such members are debtors in 
     cases under title 11 of the United States Code that are 
     substantially related to service that qualifies such members 
     for the benefits of such provisions,
       (3) whether and to what degree such members are debtors in 
     cases under such title that are materially related to such 
     service, and
       (4) the effects that the use by such members of section 
     707(b)(2)(D) of such title, as amended by this Act, has on 
     the bankruptcy system, creditors, and the debt-incurrence 
     practices of such members.
       (b) Factors.--For purposes of subsection (a)--
       (1) a case shall be considered to be substantially related 
     to the service of a member of a reserve component of the 
     Armed Forces or a member of the National Guard that qualifies 
     such member for the benefits of the provisions of law amended 
     (and as amended) by this Act if more than 33 percent of the 
     aggregate amount of the debts in such case is incurred as a 
     direct or indirect result of such service,
       (2) a case shall be considered to be materially related to 
     the service of a member of a reserve component of the Armed 
     Forces or a member of the National Guard that qualifies such 
     member for the benefits of such provisions if more than 10 
     percent of the aggregate amount of the debts in such case is 
     incurred as a direct or indirect result of such service, and
       (3) the term ``effects'' means--
       (A) with respect to the bankruptcy system and creditors--
       (i) the number of cases under title 11 of the United States 
     Code in which members of reserve components of the Armed 
     Forces and members of the National Guard avail themselves of 
     the benefits of such provisions,
       (ii) the aggregate amount of debt in such cases,
       (iii) the aggregate amount of debt of such members 
     discharged in cases under chapter 7 of such title,
       (iv) the aggregate amount of debt of such members in cases 
     under chapter 7 of such title as of the time such cases are 
     converted to cases under chapter 13 of such title,
       (v) the amount of resources expended by the bankruptcy 
     courts and by the bankruptcy trustees, stated separately, in 
     cases under title 11 of the United States Code in which such 
     members avail themselves of the benefits of such provisions, 
     and
       (vi) whether and to what extent there is any indicia of 
     abuse or potential abuse of such provisions, and
       (B) with respect to debt-incurrence practices--
       (i) any increase in the average levels of debt incurred by 
     such members before, during, or after such service,
       (ii) any indicia of changes in debt-incurrence practices 
     adopted by such members in anticipation of benefitting from 
     such provisions in any potential case under such title; and
       (iii) any indicia of abuse or potential abuse of such 
     provisions reflected in the debt-incurrence of such members.

     SEC. 4. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

       (a) Effective Date.--Except as provided in subsection (b), 
     this Act and the amendments made by this Act shall take 
     effect 60 days after the date of enactment of this Act.
       (b) Application of Amendments.--The amendments made by this 
     Act shall apply only with respect to cases commenced under 
     title 11 of the United States Code in the 3-year period 
     beginning on the effective date of this Act.
                                 ______