[House Report 118-283]
[From the U.S. Government Publishing Office]


118th Congress }                                          { REPORT 
                        HOUSE OF REPRESENTATIVES
 1st Session   }                                          { 118-283

======================================================================
 
               NATIONAL GUARD AND RESERVISTS DEBT RELIEF 
                         EXTENSION ACT OF 2023

                                _______
                                

 November 29, 2023.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

    Mr. Jordan, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 3315]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 3315) to exempt for an additional 4-year 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, having 
considered the same, reports favorably thereon without 
amendment and recommends that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for the Legislation..........................     2
Hearings.........................................................     3
Committee Consideration..........................................     3
Committee Votes..................................................     3
Committee Oversight Findings.....................................     5
New Budget Authority and Tax Expenditures........................     5
Congressional Budget Office Cost Estimate........................     5
Committee Estimate of Budgetary Effects..........................     6
Duplication of Federal Programs..................................     6
Performance Goals and Objectives.................................     6
Advisory on Earmarks.............................................     6
Federal Mandates Statement.......................................     7
Advisory Committee Statement.....................................     7
Applicability to Legislative Branch..............................     7
Section-by-Section Analysis......................................     7
Changes in Existing Law Made by the Bill, as Reported............     7

                          Purpose and Summary

    H.R. 3315, the National Guard and Reservists Debt Relief 
Extension Act of 2023, introduced by Rep. Steve Cohen (D-TN), 
would extend the temporary authorization exempting certain 
qualifying National Guard members and reserve component members 
of the Armed Services from the Bankruptcy Code's means test for 
four years.

                Background and Need for the Legislation

    Among other things, Chapter 7 bankruptcy allows consumer 
debtors to seek broad forgiveness for their debts and pursue a 
``fresh start'' financially.\1\ One important consideration for 
bankruptcy policy is that an unlimited ability to pursue debt 
forgiveness would create moral hazard and a system ripe for 
abuse.\2\ Without adequate checks and balances, some consumers 
might seek to have their debts canceled despite having the 
ability to repay them. Stemming from concerns about such abuse, 
the Bankruptcy Abuse Prevention and Consumer Protection Act 
(BAPCPA) of 2005 established a ``means test'' to gauge an 
individual consumer debtor's eligibility for Chapter 7 
bankruptcy.\3\
---------------------------------------------------------------------------
    \1\See Michael D. Contino, Bankruptcy Basics: A Primer, R45137, 
Cong. Research Serv. 11 (Oct. 2022).
    \2\See Mary A. DeFalaise, Means Testing and Preventing Abuse by 
Consumer Debtors, U.S. Att'ys' Bull., Jul. 2006, at 2.
    \3\Bankruptcy Basics, supra note 1, at 12.
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    Under the means test, to qualify for Chapter 7 debt 
forgiveness, a consumer debtor must submit six months of 
financial statements that show income and expenses.\4\ The 
information is then used to determine a debtor's ability to 
repay debts.\5\ The debtor is eligible for Chapter 7 debt 
forgiveness only if the debtor's income is less than the median 
income for his or her state,\6\ or if the debtor's disposable 
income is less than the statutory thresholds.\7\
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    \4\11 U.S.C. Sec. 101 (10A); see also Means Testing, U.S. Dep't of 
Just., https://www.justice.gov/ust/means-testing (last accessed Nov. 
20, 2023).
    \5\Bankruptcy Basics, supra note 1, at 12.
    \6\11 U.S.C. Sec. 707(b)(6).
    \7\11 U.S.C. Sec. 707(b)(2)(A)(i); see United States Trustee 
Program, Statement of the U.S. Trustee Program's Position on Legal 
Issues Arising Under the Chapter 7 Means Test, U.S. Dep't of Just 
(2012).
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    The income and expenses of guardsmen and reservists vary 
based on whether they are placed on active duty. When called to 
active duty, guardsmen and reservists may receive significantly 
different salaries than in their civilian careers.\8\ They may 
also have different expenses during active duty.\9\ Because the 
means test looks at income and expense data for the six months 
prior to a debtor's filing for bankruptcy, the result of a 
means test calculation for a guardsman or reservist, following 
an active duty tour, may inaccurately indicate an ability to 
repay their debts. Such a result penalizes those reservists and 
members for their service. If they were to be subject to the 
Chapter 7 means test requirement, National Guard members and 
Armed Services reservists, therefore, would be placed at a 
disadvantage compared to their civilian colleagues who never 
served.
---------------------------------------------------------------------------
    \8\See How the National Guard and Reserves May Impact your Budget, 
USAA (Jul. 7, 2023), https://www.usaa.com/inet/wc/advice-military-how-
the-national-guard-and-reserves-may-impact-your-budget (last accessed 
Nov. 20, 2023).
    \9\See, e.g., Combat Zone Tax Exclusion (CZTE), U.S. Army, https://
myarmy
benefits.us.army.mil/Benefit-Library/Federal-Benefits/Combat-Zone-Tax-
Exclusion-(CZTE)-?serv
=122 (last accessed Nov. 20, 2023).
---------------------------------------------------------------------------
    Currently--under the National Guard and Reservists Debt 
Relief Act of 2008,\10\ as amended--guardsmen or reservists 
called to active duty for 90 days or more after September 11, 
2001, are exempt from the means test requirement if they meet 
the following criteria: (1) the service member is currently 
serving an active-duty tour; or (2) the service member finished 
an active-duty tour within the 540 days preceding the 
bankruptcy filing.\11\
---------------------------------------------------------------------------
    \10\ Pub. L. No. 110-438, 122 Stat. 5000 (2008).
    \11\11 U.S.C. Sec. 707(b)(2)(D).
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    The current exemption from the means test is set to expire 
on December 19, 2023. Congress created the exemption in 2008, 
and extended it in 2011, 2015, and 2019. In 2008, the vote for 
the exemption was unanimous. In 2011, 2015, and 2019, the bill 
passed on suspension, without amendment, and with near 
unanimous support.\12\
---------------------------------------------------------------------------
    \12\In 2011, the bill passed 407-1. In 2015, the bill passed 419-1. 
In 2019, the bill passed 
417-1.
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                                Hearings

    For the purposes of clause 3(c)(6)(A) of House rule XIII, 
the Committee states that no hearings were held to assist in 
the formulation of H.R. 3315.

                        Committee Consideration

    On November 2, 2023, the Committee met in open session and 
ordered the bill, H.R. 3315, favorably reported by a roll call 
vote of 24 to 0, a quorum being present.

                            Committee Votes

    In compliance with clause 3(b) of House rule XIII, the 
following roll call votes occurred during the Committee's 
consideration of H.R. 3315:
    1. Vote on favorably reporting H.R. 3315--passed 24 ayes to 
0 nays.


                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of House rule XIII, the 
Committee advises that the findings and recommendations of the 
Committee, based on oversight activities under clause 2(b)(1) 
of rule X of the Rules of the House of Representatives, are 
incorporated in the descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives does not apply where a cost estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974 has been timely submitted prior to filing of the report 
and is included in the report. Such a cost estimate is included 
in this report.

               Congressional Budget Office Cost Estimate

    With respect to the requirement of clause 3(c)(3) of rule 
XIII of the Rules of the House of Representatives and section 
402 of the Congressional Budget Act of 1974, the Committee has 
received the enclosed cost estimate for H.R. 3315 from the 
Director of the Congressional Budget Office:




    H.R. 3315 would exempt, through the middle of December 
2027, National Guard members and reservists who are serving on 
active duty (or whose service has ended within 540 days) from 
meeting the income requirements necessary to qualify for 
Chapter 7 bankruptcy protection. Under current law, that 
exemption will expire in December 2023.
    CBO expects that enacting the bill would result in some 
people filing under Chapter 7 who otherwise will either file 
under Chapter 13 or will not file at all. Filing under Chapter 
7 is generally more attractive because there are no limits on 
the amount of debt that the filer can have, and filers are not 
required to enter a repayment plan as they are under Chapter 
13. However, borrowers applying under Chapter 7 have to meet 
income requirements that limit who can apply under that 
chapter; Chapter 13 does not have any income requirements.
    Using information from the Government Accountability Office 
and the Administrative Office of the U.S. Courts, CBO estimates 
that 0.5 percent of all bankruptcy filers are National Guard 
members and reservists. Under the bill, CBO estimates that each 
year about 100 people who otherwise would file for bankruptcy 
under Chapter 13 would instead file under Chapter 7. CBO also 
expects that a smaller number would file under Chapter 7 who 
would not otherwise file for bankruptcy.
    People who file for bankruptcy protection pay fees to the 
federal judiciary. The Chapter 7 fees are slightly higher than 
those for Chapter 13. Filing fees are classified in the budget 
as a combination of revenues and as collections that offset 
appropriations for the U.S. Trustee System, which oversees 
bankruptcy filings. The judiciary can spend any revenues 
credited to them without further appropriation to cover its 
administrative costs. The trustee system is permitted to spend 
the offsetting collections to cover its costs to the extent 
that authority is provided in an appropriations act.
    Because the expected number of affected filers would be 
small, CBO estimates that, on net, the budgetary effects would 
not be significant.
    The CBO staff contact for this estimate is Jon Sperl. The 
estimate was reviewed by H. Samuel Papenfuss, Deputy Director 
of Budget Analysis.
                                         Phillip L. Swagel,
                             Director, Congressional Budget Office.

                Committee Estimate of Budgetary Effects

    With respect to the requirements of clause 3(d)(1) of rule 
XIII of the Rules of the House of Representatives, the 
Committee adopts as its own the cost estimate prepared by the 
Director of the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974.

                    Duplication of Federal Programs

    Pursuant to clause 3(c)(5) of House rule XIII, no provision 
of H.R. 3315 establishes or reauthorizes a program of the 
federal government known to be duplicative of another federal 
program.

                    Performance Goals and Objectives

    The Committee states that pursuant to clause 3(c)(4) of 
House rule XIII, H.R. 3315 would extend the temporary 
authorization exempting certain qualifying National Guard 
members and reserve component members of the Armed Services 
from the Bankruptcy Code's means test for four years.

                          Advisory on Earmarks

    In accordance with clause 9 of House rule XXI, H.R. 3315 
does not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits as defined in clauses 
9(d), 9(e), or 9(f) of House rule XXI.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act (Pub. L. 104-
1).

                      Section-by-Section Analysis


Sec. 1. Short title

    Section 1 sets forth the short title of the bill as the 
``National Guard and Reservists Debt Relief Extension Act of 
2023.''

Sec. 2. National Guard and Reservists Debt Relief Amendment

    Section 2 amends the National Guard and Reservists Debt 
Relief Act to further extend the temporary exemption for four 
years.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

NATIONAL GUARD AND RESERVISTS DEBT RELIEF ACT OF 2008

           *       *       *       *       *       *       *



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 [15-year] 19-year 
period beginning on the effective date of this Act.

                                  [all]