National Guard and Reservists Debt Relief Act of 2008:



On October 20, 2008, the President signed the National Guard and Reservists Debt Relief Act of 2008, Pub.L. 110-438. The Act provides a temporary exclusion from the chapter 7 means test for National Guardsmen and Reservists called to a minimum of 90 days active duty or homeland defense activity after September 11, 2001.


Effective Date:


The amendment to section 707(b)(2)(D) of the Bankruptcy Code will be effective on December 19, 2008, which is 60 days after enactment.


Application:


The amendment to section 707(b)(2)(D) of the Bankruptcy Code applies only with respect to chapter 7 consumer cases commenced under title 11 of the United States Code in the 3-year period beginning on the effective date of this Act.


Expiration of the exclusion:


Because the temporary exclusion expires 540 days after the debtor is released from active duty or is no longer performing homeland defense activities, the exclusion could expire while a chapter 7 debtor’s case is pending and while a motion to dismiss the case may still be filed under section 707(b)(2). If the exclusion expires in those circumstances, the Interim Rule requires that the clerk give the debtor notice of the need to complete the means test and that the debtor do so no later than 14 days after the exclusion has expired.


Rules and Forms:


The Judicial Conference has approved an amendment to Official Form 22A, Statement of Current Monthly Income and Means Test Calculation, which includes a new Part 1C where qualifying debtors can invoke the exclusion. In addition, the Judicial Conference approved transmission of proposed Interim Rule 1007-I to courts for adoption as a local rule. On December 5, 2008, the judges of the United States Bankruptcy Court for the District of Minnesota entered an order adopting Interim Rule 1007-I, effective December 19, 2008. The text of the interim rule is attached as an exhibit to the order and has been added to the court’s website in Part I of its Local Rules.


Mechanics for invoking and terminating the exclusion in CM/ECF:

 

           1.        If a chapter 7 debtor qualifies for exclusion from the means test as a member of the National Guard or Reserves, the attorney should select “no” in response to the presumption arises screen prompt in case opening. If the case is filed by joint debtors, the attorney should select the presumption option appropriate for the debtor who is not in the National Guard or Reserves, as shown in the table below:


If:

And:

Then:

One debtor has an

exclusion

there is no presumption of

abuse for the second debtor

select “no” at the presumption arises screen

One debtor has an

exclusion

there is a presumption of

abuse for the second debtor

select “yes” at the presumption arises screen

One debtor has an

exclusion

the presumption of abuse is

unknown

select “unknown” at the presumption arises screen

One debtor has an

exclusion

the second debtor also

claims an exclusion

select “no” at the presumption arises screen

 

           2.        Once the case has been successfully opened, the debtor’s attorney should docket the new event, Statement of Debtor's Temporary Exclusion from Means Test (under the Bankruptcy menu, Commencement Events, Ch 7 Consumer). This is a “text only” event; no .pdf document is required. This event will set a “flag” on the docket identifying the debtor as temporarily excluded from the means test.

 

           3.        If the debtor is released from active duty during the pendency of the case, the attorney should docket the event Release from Active Duty (under the Bankruptcy menu, Post-Petition Events, Other Case Events). This event, too, is a “text only” event for which no document is required. The attorney will need to input the date on which the debtor was released from active duty, to enable the CM system to calculate the expiration date of the temporary exclusion.