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  1. #1
    Join Date
    Sep 2008
    Posts
    2

    Default National Guard and Reservists Debt Relief Act

    My question involves bankruptcy in the state of: Indiana

    I came off of active duty in March of 2012, so I am within the 540 days that the National Guard and Reservists Debt Relief Act allows for the means test exemption. My income has increased considerably since I came off active duty and, I was told at a consultation, even though I would be exempt from the means test, that my income may still disallow me from filing a chapter 7. I was under the assumption that the means test exemption was enacted to protect me from that very problem. The lawyer that I had the consult with specifically said he had no experience (as far as I know, not many do) with the National Guard and Reservists Debt Relief Act and couldn't really clarify. If anybody could possibly offer me more information, that would be great.

  2. #2
    Join Date
    Dec 2008
    Location
    Calif
    Posts
    289

    Default Re: National Guard and Reservists Debt Relief Act

    I would say, find a lawyer who knows this area. From what you've said, it appears you do qualify. Do an internet search for past cases on this issue. "and Reserve members who are enduring financial hardships to receive bankruptcy assistance. The Bankruptcy Abuse
    Prevention Act of 2005 required that filers go through a rigorous means test in order to prevent individual debt to be
    discharged into bankruptcy. The National Guard and Reservists Debt Relief Act exempts you from the means test,
    allowing for more time to get your finances back in order and to file for bankruptcy protection. This new law applies
    to those Guard and Reservists who have been on active duty since September 11, 2001. The protection is effective
    while the service member is on active duty for more than 90 days and for 540 days following activation"......there is no mention about any increase in your pay during those 540 days. It just says you are exempt, period.

  3. #3
    Join Date
    Sep 2005
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    98,846

    Default Re: National Guard and Reservists Debt Relief Act

    There's not a whole lot of reported case law on the National Guard and Reservists Debt Relief Act of 2008, but the overall trend appears to be to hold that it applies to the means test set forth at 11 USC Sec. 707(b)(2). See, e.g., In re Green, 431 B.R. 187, 190 (Bankr. S.D. Ohio 2010). Note, however, as that case indicates creditors can still challenge discharge based upon ability to repay, which is a separate issue than the means test to qualify for Chapter 7 bankruptcy.
    Quote Quoting In re Green, 431 B.R. 187, 190 (Bankr. S.D. Ohio 2010)
    The Bankruptcy Code does not define the phrase "any form of means testing" as used in § 707(b)(2)(D). However, its meaning is quite clear in both the original version of § 707(b)(2)(D) and the 2008 amended version. It refers to the statutory formula enacted by BAPCPA and codified in § 707(b)(2). The Conference Report of the House of Representatives Judiciary Committee, the best available legislative history of BAPCPA, explains that the primary purpose of BAPCPA, and the central debate which preceded its becoming law, was whether the Bankruptcy Code, for the first time, should include "means testing"—a statutory formula for determining if Chapter 7 debtors who could pay back a certain portion of their unsecured debt should have their case dismissed (or converted with the debtor's consent):

    The heart of the bill's consumer bankruptcy reforms consists of the implementation of an income/expense screening mechanism (`needs based bankruptcy relief or means testing') which is intended to ensure that debtors repay creditors the maximum they can afford.

    H.R. Rep. 109-31(1) (2005), reprinted in 2005 U.S.C.C.A.N. 88, 89. In simplest terms, "means testing" did not exist under the Bankruptcy Code prior to BAPCPA. See also Phillips, 417 B.R. at 36 ("`BAPCPA'" brought a "sea change" to [§ 707(b)].).

    In addition, § 707(b)(2)(D) is a subsection of § 707(b)(2) and its language is not repeated or referenced in § 707(b)(3). The statutory construction of § 707(b)(2)(D) referencing subsections A through C of § 707(b)(2), but not referencing § 707(b)(3), strongly suggests § 707(b)(2)(D) applies only to the provisions of § 707(b)(2). Cf. Florida Dep't of Revenue v. Piccadilly Cafeterias, Inc., 554 U.S. 33, ___, 128 S.Ct. 2326, 2336, 171 L.Ed.2d 203 (2008) ("The placement of § 1146(a) within a subchapter expressly limited to postconfirmation matters undermines Piccadilly's view that § 1146(a) covers preconfirmation transfers."). Moreover, § 707(b)(3) represents, with certain burdens of proof modified by BAPCPA's changes to § 707(b), a codification of pre-BAPCPA § 707(b), which allowed a dismissal for bad faith or a totality of the debtor's financial condition. See Behlke v. Eisen (In re Behlke), 358 F.3d 429 (6th Cir.2004). An ability to pay argument under § 707(b)(3) is not a means test any more than pre-BAPCPA § 707(b) was a means test.

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