Soldiers and Recent Veterans May Soon Be Subject to the Means Test

The latter provision - which exempts from the means test active-duty members of the armed forces and those who have recently completed active-duty service - is set to expire on Dec. 20, 2023. The legislation was referred to the House Judiciary Committee on May 15, 2023, with no action having been ta...

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Bibliographic Details
Published inAmerican Bankruptcy Institute journal Vol. 42; no. 11; pp. 8 - 56
Main Author Verstandig, Maurice "MAC"
Format Journal Article
LanguageEnglish
Published Alexandria American Bankruptcy Institute 01.11.2023
Subjects
Armed forces
Bankruptcy laws
Consumer protection
Debt cancellation
Defense
Language
Legislation
Military reserves
Military service
Personal bankruptcy
Veterans
United States > US
Online AccessGet full text
ISSN1931-7522

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Summary:The latter provision - which exempts from the means test active-duty members of the armed forces and those who have recently completed active-duty service - is set to expire on Dec. 20, 2023. The legislation was referred to the House Judiciary Committee on May 15, 2023, with no action having been taken since and with no accompanying bill having been introduced in the Senate.18 Potential Impact of Lapse Should the pending legislation, or comparable legislation, not be enacted prior to Dec. 20, 2023, means-test compliance will become a very real issue for many servicemembers and veterans who would not previously have had occasion to question their own chapter 7 eligibility. Section 707 does contemplate "a call or order to active duty in the Armed Forces" as a "special circumstance" that may permit a debtor to proceed under chapter 7 despite not being compliant with the means test.20 Making such a showing, however, would seem a palpably heavier burden than merely demonstrating current (or recent) military service, as well as one available to far fewer people. Complicating matters, the U.S. Supreme Court has also intimated - arguably in dicta, and in a manner lending itself to conflicting interpretations - that the "special circumstances" exception to the means test is unavailable to debtors who have the "reasonable alternative" of seeking chapter 13 relief.21 VerStandig of The VerStandig Law Firm represents debtors and private lenders in chapter 11 cases in Washington, D.C., and Fargo, N.D. 1 11 U.S.C. 707(b)(1), 707(b)(2)(D).
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ISSN:1931-7522