National Guard and Reservists Debt Relief Act of 2008

Floor Speech

Madam Speaker, I rise in strong support of H.R. 4044, the National Guard and Reservists Debt Relief Act of 2008, a bill I am proud to have authored. Since September 11, 2008, more than 460,000 Reservists and members of the National Guard have been called to active duty in Iraq and Afghanistan. These courageous men and women have selflessly left their families and their jobs to fight for our country on the battlefield, often with little or no notice and no time to prepare for the financial challenges that their deployments will present.

In April 2005, the Bankruptcy Abuse Prevention and Consumer Act made it harder for individuals to discharge their debts in bankruptcy. That legislation requires debtors who file for bankruptcy to submit to a means test that assesses their eligibility for bankruptcy protection. H.R. 4044 would exempt members of the National Guard and Reserves facing bankruptcy as a result of their service from that means test.

When the changes to bankruptcy law were made, Congress understood the importance of exempting disabled veterans whose debts were incurred while they were on active duty from means testing. However, the men and women of the National Guard and Reserves were left out; their sacrifice was disregarded. That is why I introduced this legislation with my friend and colleague Congressman Dana Rohrabacher. Those heroes returning from active service in the Guard and Reserves deserve the same flexibility.

H.R. 4044 allows members of the National Guard and Reservists to file for Chapter 7 without the added paperwork burden and obstacles of the means test. The bill would apply to our citizen soldiers who have served in the armed forces for more than 90 days since 9/11 and would grant them an exemption from the test for up to a year and a half after they return home. It also requires a Government Accountability Office report which will help us quantify the hardships our veterans face when they return home by tracking how many apply for bankruptcy protection.

Many members of the Guard and Reserves leave for the war thinking they will only be deployed for 6 to 12 months and end up getting their tours involuntarily extended. One quarter of those soldiers have been deployed more than once. There is almost no way that they can anticipate or prepare for that extension of their service financially.

According to the National Guard, forty percent of Reservists and members of the National Guard lose money when they leave their civilian jobs for active duty. This is especially true for servicemembers who own and operate small businesses who put their businesses on hold while they serve thousands of miles away.

Now Reservists and National Guardsmen and women are coming home to a weak economy and record unemployment levels. Eighteen percent of recently separated servicemembers are currently unemployed. They are disproportionately feeling the pinch of record gas prices, housing foreclosures, and food costs.

We have all heard from constituent servicemembers who have returned home to find their families in financial disarray. Many reservists took a pay cut from their regular jobs to serve overseas; others find that when they are discharged, if they can find work, they are returning home to lower salaries--in many instances, lower than their combat pay. Twenty five percent of servicemembers retuning from Iraq or Afghanistan earn less than $25,000 a year. Some veterans are driven to homelessness--the VA estimates that there are 1,500 homeless veterans of the wars in Iraq and Afghanistan.

The means test has a particularly adverse impact on servicemembers. Most servicemembers receive higher compensation in the form of combat pay and have fewer expenses while serving abroad, but upon leaving service they face lower incomes and higher expenses. Because the means test factors in a person's income and expenses for the six-month period preceding the bankruptcy filing, a veteran's income is artificially inflated and expenses are inaccurately low. As a result, veterans risk having their chapter 7 case dismissed and being forced to file under the stricter chapter 13.

The men and women of the National Guard and Reserves have risked their lives to protect us. If servicemembers, through no fault of their own, end up in bankruptcy, they deserve protection from Congress. This bill brings us one step closer to providing them with financial relief when they come home from their service.

I would like to offer my heartfelt thanks to Chairman Conyers and Subcommittee Chairwoman Linda Sánchez for their commitment to and work on this bill and to the minority Committee Members for working with us to find a compromise and get this bill on the floor today. And again, I thank my colleague Congressman Rohrabacher, whose passion and persistence on this issue have made him a wonderful ally.

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