19–006 

112TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 112–256 

NATIONAL GUARD AND RESERVIST DEBT RELIEF 

EXTENSION ACT OF 2011 

OCTOBER 18, 2011.—Committed to the Committee of the Whole House on the State 

of the Union and ordered to be printed 

Mr. SMITH of Texas, from the Committee on the Judiciary, 

submitted the following 

R E P O R T 

[To accompany H.R. 2192] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on the Judiciary, to whom was referred the bill 

(H.R. 2192) 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, report favorably thereon without amendment and recommend 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 ............................................................................... 3 

New Budget Authority and Tax Expenditures ...................................................... 3 

Congressional Budget Office Cost Estimate .......................................................... 4 

Performance Goals and Objectives ......................................................................... 5 

Advisory on Earmarks ............................................................................................. 5 

Section-by-Section Analysis .................................................................................... 5 

Changes in Existing Law Made by the Bill, as Reported ..................................... 5 


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1 11 U.S.C. § 707(b)(2). 

2 Id. § 707(b)(1). 3 Compare 11 U.S.C. § 1328(a) (granting discharge to chapter 13 debtor ‘‘as soon as practicable 

after completion by the debtor of all payments under the plan’’), with 11 U.S.C. § 727 (granting 

discharge to debtor without any precondition). A bankruptcy court generally waits until the statutory period for filing a complaint objecting to discharge or a motion to dismiss the case for substantial abuse has lapsed, usually about 4 months after the petition date. 4See generally National Guard and Reservists Debt Relief Act of 2008: Hearing on H.R. 4044 

Before the Subcomm. on Commercial & Admin. Law of the H. Comm. on the Judiciary, 110th 

Cong. (2008) [hereinafter 2008 Hearing]. 5 National Guard and Reservists Debt Relief Act of 2008, Pub. L. No. 110–438, 122 Stat. 5000 

(2008). 6 Id. § 4. 7See generally H.R. REP. NO. 110–726 (2008). 8Lawrence Kapp, Reserve Component Personnel Issues: Questions and Answers, Congressional 

Research Service Report No. RL30802 (2010), available at http://www.crs.gov/pages/ 

Reports.aspx?PRODCODE=RL30802&Source=cli (last visited Oct. 3, 2011) 

Purpose and Summary 

Since 2005, the Bankruptcy Code has contained a ‘‘means test’’ 

that examines whether individual debtors have the financial ability 

to commit some portion of their monthly income to the repayment 

of their creditors.1 If a debtor has the ability to repay, his filing of 

a chapter 7 bankruptcy case is presumed to be ‘‘substantial abuse’’ 

and his case may be dismissed.2 Compared to a chapter 13 bankruptcy case, in which a debtor with the means to repay creditors 

obtains a discharge from prepetition debts generally after adhering 

to a 3- to 5-year repayment plan, a debtor in a chapter 7 case obtains a discharge relatively quickly and without the repayment condition.3 Thus, many debtors prefer to file a chapter 7 case if they 

are able and have no non-exempt assets of significant value. 

In April 2008, the Subcommittee on Commercial and Administrative Law of the House Committee on the Judiciary held a legislative hearing on H.R. 4044, the National Guard and Reservists Debt 

Relief Act of 2008, which highlighted the unique financial hardships that military reservists and members of the National Guard 

face upon their return from active service.4 Following that hearing, 

Congress passed a version of that legislation (the ‘‘NGRDRA’’), 

which exempts certain members of reserve components of the 

Armed Forces and members of the National Guard from the means 

test.5 Pursuant to its terms, the Act took effect on December 19, 

2008, which was 60 days after its enactment. The Act was temporary; it expires on December 19, 2011.6

Background and Need for the Legislation 

Reference is made to the report of the House Committee on the 

Judiciary in the 110th Congress to accompany H.R. 4044.7 That report sets forth the substantive basis upon which Public Law 110– 

438 was enacted and is incorporated herein by reference. 

Because of America’s ongoing military conflicts, the degree to 

which the United States relies upon its military reservists and National Guardsmen has not significantly subsided during the 3 years 

since the 2008 enactment of the NGRDRA. Between 2001 and July 

2010, 776,413 military reservists have either involuntarily or voluntarily been activated to defend American interests abroad.8 The 

financial hardships they face upon their return from the theater of 

war, described in detail by the witnesses at the 2008 Hearing, persist in 2011. 


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9GOV’T ACCOUNTABILITY OFFICE, MILITARY PERSONNEL: OBSERVATIONS ON THE USE AND EF- FECTS OF THE NATIONAL GUARD AND RESERVISTS DEBT RELIEF ACT OF 2008, 13 (2010) (finding 

only 8% of eligible servicemembers who filed for bankruptcy relief under chapter 7 have claimed 

the means test exemption). 10 Id. 11 Id. at 16–19. 12 Id. at 20–22. 13 Id. at 25–26. 14 Id. at 18. 

While the Committee recognizes the unique financial struggles of 

returning reservists and Guardsmen, the Government Accountability Office (GAO) report commissioned by section 3 of the 

NGRDRA suggests that the NGRDRA has provided only little relief.9 Only 8% of eligible servicemembers—a total of 176 individuals—claimed the means test exemption.10 Additionally, only 32% 

of the aggregate debt reported by servicemembers could potentially 

be discharged.11 The GAO further reported that 10 of the 11 

servicemembers it interviewed did not attribute their debt to military service,12 and that the NGRDRA has had ‘‘no impact’’ on 

servicemembers’ debt incurrence practices.13 The GAO was ‘‘unable 

to identify any clear indications of abuse or potential abuse of the 

exemption.’’ 14

Though the GAO concluded that the NGRDRA has had only a 

modest effect, the United States is still engaged in military conflicts around the world and at least some reservists continue to 

benefit from the means test exemption. H.R. 2192 extends the exemption for a period of 4 years to December 19, 2015. 

Hearings 

The Committee on the Judiciary held no hearings on H.R. 2192. 

Committee Consideration 

On September 21, 2011, the Committee met in open session and 

ordered the bill H.R. 2192 favorably reported by voice vote, a 

quorum being present. 

Committee Votes 

In compliance with clause 3(b) of rule XIII of the Rules of the 

House of Representatives, the Committee advises that there were 

no recorded votes during the Committee’s consideration of H.R. 

2192. 

Committee Oversight Findings 

In compliance with clause 3(c)(1) of rule XIII of the Rules of the 

House of Representatives, 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 is inapplicable because this legislation does not provide new 

budgetary authority or increased tax expenditures. 


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Congressional Budget Office Cost Estimate 

In compliance with clause 3(c)(3) of rule XIII of the Rules of the 

House of Representatives, the Committee sets forth, with respect to 

the bill, H.R. 2192, the following estimate and comparison prepared 

by the Director of the Congressional Budget Office under section 

402 of the Congressional Budget Act of 1974: 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, October 5, 2011. 

Hon. LAMAR SMITH, CHAIRMAN, 

Committee on the Judiciary, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 2192, the ‘‘National 

Guard and Reservist Debt Relief Extension Act of 2011.’’ 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Martin von Gnechten, 

who can be reached at 226–2860. 

Sincerely, 

DOUGLAS W. ELMENDORF, 

Director. 

Enclosure 

cc: Honorable John Conyers, Jr. 

Ranking Member 

H.R. 2192—National Guard and Reservist Debt Relief Extension 

Act of 2011. 

Under current law, National Guard members and active reservists are exempt from meeting certain income requirements to qualify for Chapter 7 bankruptcy protection. That exemption expires 

after the beginning of fiscal year 2012. H.R. 2192 would extend 

that exemption through 2016. 

CBO estimates that implementing this bill would have no significant impact on the Federal budget. Enacting H.R. 2192 would affect direct spending and revenues; therefore, pay-as-you-go procedures apply. However, CBO estimates that any net effects would 

be insignificant for each year. 

CBO expects that enacting this legislation would lead some individuals to file for bankruptcy who would not do so under current 

law. Bankruptcy filing fees collected from those individuals would 

increase both Federal revenues and offsetting receipts, because portions of such fees are classified in the budget as revenues and offsetting receipts. 

CBO also expects that, by extending the exemption, some reservists who would apply for Chapter 13 bankruptcy under current law 

would instead apply under Chapter 7. (Under current law, a debtor’s income, less certain expenses, must fall below a certain threshold relative to the outstanding debt to qualify for protection under 

Chapter 7 of the bankruptcy code. Those who do not qualify can file 

under Chapter 13.) 

Based on information from the Government Accountability Office 

and the Administrative Office of the United States Courts, CBO estimates that National Guard members and active reservists make 


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up about one-tenth of one percent of all bankruptcy filers, and that 

fewer than 500 people a year who would otherwise file for Chapter 

13 protection would file for Chapter 7 under this bill. 

Because filing fees for Chapter 7 are lower than those for Chapter 13, shifting cases from Chapter 13 to Chapter 7 would slightly 

reduce net Federal revenues and offsetting receipts. CBO estimates 

that those reductions would roughly offset the increase in revenues 

and offsetting receipts that would result from new filers under the 

bill-resulting in no significant net effect on the Federal budget. 

H.R. 2192 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would 

impose no costs on State, local, or tribal governments. 

The CBO staff contact for this estimate is Martin von Gnechten. 

The estimate was approved by Theresa Gullo, Deputy Assistant Director for Budget Analysis. 

Performance Goals and Objectives 

The Committee states that pursuant to clause 3(c)(4) of rule XIII 

of the Rules of the House of Representatives, H.R. 2192 extends the 

effectiveness of Public Law 110–438 by 4 years. 

Advisory on Earmarks 

In accordance with clause 9 of rule XXI of the Rules of the House 

of Representatives, H.R. 2192 does not contain any congressional 

earmarks, limited tax benefits, or limited tariff benefits as defined 

in clause 9(e), 9(f), or 9(g) of Rule XXI. 

Section-by-Section Analysis 

Section 1 sets forth the short title of the bill as the ‘‘National 

Guard and Reservist Debt Relief Extension Act of 2011.’’ 

Section 2 extends the effective date of Public Law 110–438 by 4 

years. Under current law, the means test exemption for military reservists and National Guardsmen expires on December 19, 2011. 

Section 2 extends that date to December 19, 2015. 

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 italic, 

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) * * * 


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(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 ø3-year¿ 7-year period beginning on the effective date of this Act. 

* * * * * * * 

Æ 


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