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

Serving in the military is a huge decision and sacrifice with financial ramifications. Service members give up their freedom so that others in our country can be free. Deployment can last for extended periods of time, and during those months, debt doesn’t stop. It can be difficult to keep up with debt payments, and many service members have families they are responsible for, which sometimes includes financial emergencies. Bankruptcy can offer relief to people who are in overwhelming debt, but members of the military and veterans often wonder if it’s an option for them. Not only is bankruptcy a possibility, but service members also have additional benefits and financial protection. 

 Active Duty

 Filing bankruptcy is an important decision with long-term consequences, so you’ll need to do some research before moving forward. If you’re currently actively serving, a bankruptcy could affect your security clearance. This may keep you from future promotions. But, having large amounts of debt can also hold you back in your career. Speak to your supervisors for advice, and explain why you’re filing bankruptcy. You can present it in a positive light, as you’re taking charge of your finances and taking steps to put debt behind you. 

 If you do decide to file, you’ll be protected under the Service members’ Civil Relief Act (SCRA.) In addition to the automatic stay, you’ll be given extra time to get your finances in order. This will postpone your bankruptcy and any other proceedings you may be a part of. 

 Other Considerations

 Before moving forward with your bankruptcy, we’ll conduct the means test to decide which chapter of bankruptcy will serve you best. This calculation takes your income, assets, debts, and expenses, and then determines if you have enough disposable income to pay off your debts in a reasonable time. If you pass the test, you qualify for a Chapter 7, which discharges unsecured debts. If you’re a disabled veteran, we may be able to skip the Means Test. To meet this requirement, your debt must have been incurred while you were either on active duty or part of homeland security defense. You must be at least 30% disabled, and your discharge must be due to this disability. You may also be exempt from the Means Test if you were on active duty, or called to serve in a homeland defense activity as part of the National Guard, or as a reserve unit of any branch of the Armed Forces after September 11, 2001. To be eligible for this exemption, you will need to have served for at least 90 days after September 11, 2001. This exemption is good for 540 days after you left active duty. 

 Fresh Start

 Serving in the military can be a fruitful career, but no one really enlists thinking they’ll end up wealthy. It’s a job done out of pride and passion. If you’ve served or are serving in the military and are struggling to keep up with debt, bankruptcy may be an option for you. Let’s talk about how we can get your finances back on track.