Can I File Bankruptcy While I’m in the Military?

Military personnel still have their finances to take care of, and it seems no one is exempt from debt that becomes unmanageable. Members of our armed forces have families with financial needs, and unexpected, unfortunate circumstances can happen to anyone. If you’re in the military or a veteran, you may wonder if you’re able to file bankruptcy for relief. The good news is that you can, and you may even have additional protection and benefits. Before filing though, it’s important to get all the facts, including the pros and cons.

Active Duty

If you’re active duty military, you’re protected under the Service members’ Civil Relief Act (SCRA.) This is in addition to the automatic stay and can postpone or stay bankruptcy and other proceedings against you. While this is a positive, it’s possible that filing bankruptcy could affect your security clearance, which could keep you from promotions. Before making any changes to your security clearance, your situation will be evaluated. You’ll be given the opportunity to explain why you filed bankruptcy, and your job performance, work ethic, and working relationships will all be taken into consideration. As you talk to your superiors, you may be able to explain why bankruptcy is the best choice for you because you’re taking control of your finances, rather than accepting the debt you’ve accrued. Having excessive debts can also affect your security clearance, so before you take any action, it’s good to do some research.

Other Military Personnel

One of the first steps in filing bankruptcy is to complete the means test to determine which chapter of bankruptcy is the right choice for you. This calculation looks at your income, debt, and assets to determine if you have the disposable income to pay off your debts. If you’re a disabled veteran, you may be exempt from the Means Test. Your debt must have been incurred while you were on active duty or part of homeland security defense. Additionally, you must be at least 30% disabled, and your disability or injury must be why you were discharged.

If you were in the National Guard or in a reserve unit of any branch of the Armed Forces, but were called to active duty or to participate in a homeland defense activity, you may also be exempt from the Means Test. You need to have served for a period of at least 90 days after September 11, 2001. This exemption is good for 540 days after you left active duty.

New Start

Serving our country is an honor, and it can also be a financial sacrifice. If you’ve served in the military and are facing debt you can’t keep up with, bankruptcy may be a viable option for you. I can help you consider all your options and come up with a plan to start a new financial path.