Reservists would continue receiving bankruptcy support under bipartisan Tillis bill

Bipartisan legislation introduced on Nov. 15 by U.S. Sen. Thom Tillis (R-NC) would protect a clause exempting qualifying reservists in the U.S. Armed Forces and the National Guard from a provision in the U.S. Bankruptcy Code that limits their access to Chapter 7 bankruptcy.

“The men and women who serve in the National Guard and Reserves provide an invaluable service to our nation,” Sen. Tillis said. “I am proud to cosponsor this bipartisan legislation that will ensure protections for members if they fall on financial hardship.”

Because National Guard members and Reservists often receive higher pay while on active duty than at their civilian jobs, such limits could prevent them from receiving financial relief in bankruptcy, according to a bill summary provided by Sen. Tillis’ staff.

Sen. Tillis is one of eight original cosponsors of the National Guard and Reservists Debt Relief Extension Act of 2023, S. 3328, which is sponsored by U.S. Sen. Dick Durbin (D-IL).

If enacted, S. 3328 would reauthorize the National Guard and Reservists Debt Relief Extension Act, including an additional four years of relief for those members experiencing financial hardship by protecting the long-standing bipartisan carveout from means-testing restrictions in Chapter 7 bankruptcy cases, the summary says. 

Specifically, S. 3328 would exempt qualifying members who, after Sept. 11, 2001, are called to active duty or to perform a homeland defense activity for not less than 90 days, from the application of the means-test presumption of abuse under Chapter 7 of the Bankruptcy Code for an additional four-year period, according to the congressional record bill summary.

The measure has been referred for consideration to the U.S. Senate Judiciary Committee.