Many people serve in the military to give us great freedom here in the United States. Serving in the military is more than a full-time job. A service member could be deployed for months at a time. Just because you are deployed doesn’t mean that your bills stop, and they can be a lot to deal with even if you have a family back in the States. Financial emergencies happen to everyone, and when they happen, it can create a massive hardship. If you are in the military or a veteran, you may be wondering if bankruptcy is an option for you. The good news is, yes, it is an option, and you may even have extra protection and benefits.
As with any large decision, it’s always a good idea to do some research before making up your mind. There are a few very important things to consider if you are currently active duty. If you file for bankruptcy, it could affect your security clearance, which could affect any promotions you are in line for. You will be given a chance to explain why filing for bankruptcy is best for your financial situation, as you are taking charge of your debt. Having large financial debt (as opposed to bankruptcy) can also affect your security clearance, so it is important to think through how filing bankruptcy can affect you.
On the bright side, as a service member, you are protected under the Service members’ Civil Relief Act (SCRA.) This give you additional time on top of the automatic stay and will postpone your bankruptcy and other proceedings against you.
Other Military Personnel
There are several different types of bankruptcy you could choose, so the means test helps to determine which chapter of bankruptcy is best for you. The Means Test looks at your income, debt, expenses, and any assets you may have. It will determine if you have enough disposable income to pay off your debts. If you happen to be a disabled veteran, you actually may be exempt from the Means Test. The debt must have been incurred while you were on active duty or part of homeland security defense. In addition, you must be at least 30% disabled, and your disability must be the cause of your discharge.
If you were called to active duty, 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, you may also be exempt from the Means Test. 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.
Serving our country is a tremendous sacrifice. It is done with honor and pride. But it can also come at a cost financially. If you have served our country and are now struggling with debt, don’t struggle alone. I can help you figure out what your best options are and will walk with you down the path toward financial freedom.