Durbin-Leahy Bill To Help Guard And Reserve Members
Facing Bankruptcy Headed To Senate Floor
Bill Cuts Red Tape For Returning Service Members
WASHINGTON (Friday, Sept. 12, 2008) – A bill to
help National Guard and Reserve members who are struggling
financially to receive bankruptcy assistance upon returning from
deployment was voted out of the Senate Judiciary Committee
yesterday, clearing the way for its consideration by the full
Senate. The National Guard and Reservist Debt Relief Act, introduced
by Sen. Dick Durbin (D-Ill.), and cosponsored by Judiciary Committee
Chairman and National Guard Caucus Co-chair Sen. Patrick Leahy
(D-Vt.), will exempt service members from the strict entry criteria
they might face when seeking bankruptcy protection.
“Veterans from the wars in
Iraq
and Afghanistan
are coming home to a weak economy, low paying jobs and families hit
hard by the housing and gas crises,” Durbin said. “We owe those who
serve our county help as they come home and try to get back on solid
financial ground. Cutting the red tape our service members face if
they need to file for bankruptcy is critical."
“We owe a great deal to the men and women who
serve in the Guard and Reserve,” said Leahy. “This legislation
will ensure that individuals who have served and who return to a
lower paying civilian job will receive the assistance they need to
get a fresh start should they need to turn to the bankruptcy laws.
I hope the Senate will quickly pass this bill; National Guard
members and Reservists who have served so faithfully deserve no
less.”
The 2005 Bankruptcy Abuse Prevention Act
changed the U.S.
bankruptcy code, making it significantly harder for individual debt
to be discharged in bankruptcy. The changes to the law require
filers to pass a rigorous means test to assess whether the
individual is qualified for Chapter 7 bankruptcy protection. The
means test looks at an individual’s income and expenses for the six
month period preceding a bankruptcy filing, which
unfairly penalizes National Guard members and Reservists who no
longer receive the higher pay that active duty provides but are
still evaluated as if they do. The Durbin-Leahy bill would exempt
returning Guard and Reserve members from this means test, giving
them a window of time to get their finances in order and to file for
bankruptcy protection if needed.
Despite receiving much-deserved combat pay for
their overseas service, National Guard and Reserve members often
take a pay cut when they leave their jobs for a deployment. It is
estimated that a quarter of returning service members earn less than
$25,000 a year – if they are able to find a job at all. Nearly 18
percent of recently returned service members are unemployed.
The bill would also call for a Government
Accountability Office (GAO) report
on the financial hardships our veterans face after returning from
war.
A companion bill passed the House of
Representatives with bipartisan support in June.
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