Chapter 7 - Solutions for a Financial Crisis

When the means test was enacted as part of the BAPCPA in October 2005, it made requirements for filing bankruptcy a bit tougher. For those who are in serious financial trouble, however, the means test is usually a formality, since the vast majority of people who need to file bankruptcy are able.

But for those who have served the United States as National Guard and military reservists will get to skip this minor step in the bankruptcy process, streamlining the path to debt relief for these individuals. The House of Representatives approved a bill by voice vote that would exempt individuals who have served at least 90 days in Iraq and/or Afghanistan from this portion of the bankruptcy process.

Reps. Jan Schakowsky (D-Illinois) and Dana Rohrabacher (R-California) co-sponsored the bill, HR 4044, which is just one of many provisions that have been passing to step up the financial and educational incentives offered to members of the military returning home from battle. Previously, disabled veterans were allowed exemption from the means test, but many lawmakers had called for expansion of this privilege to other classes of veterans.

The new measure would cover around 450,000 Guard members and reservists who have been deployed to Iraq and Afghanistan over the past six years, many of whom, it is reported, face financial problems when they return. Chapter 7 bankruptcy is one potential solution for individuals facing mounting debt from mortgages, credit cards and other loans, one that makes good sense for many people in this precarious situation.

The Senate must still consider and pass the bill before it becomes law; if it follows the House lead, it will mean good news for veterans.