Members of the US Armed Forces have just as much right to file for bankruptcy protection as civilians. In fact, while one or both spouses are away from home serving their country, it’s not unusual for bills to pile up. Recent economic conditions have made it difficult to make ends meet and being away for long periods of time means there is less of an opportunity to get a second or third job to pay down debt.
While there are no restrictions on whether or not military members can file for bankruptcy, there are a few things to keep in mind.
If you are planning a career in the military, or have your hopes set on working your way up the ranks, be aware that some of the higher ranks require security clearances. A bankruptcy on your record could squash your chances of being approved for those clearances. In fact, you may not get far in the process of promotion once you are forced to reveal that you’ve had an account delinquent by more than 180 days. Also, if you have had your wages garnished or any judgments against you, getting the high ranking security clearances will be extremely difficult, if not impossible.
There is a silver lining, however, to filing bankruptcy while in the active military. There have been some laws passed that offer service members certain rights when they are in over their head in debt. The Service Member’s Civil Relief Act offers some protections so members of the military can keep their focus on their military positions and not on their financial problems.
According to the Act, the following items will be delayed or prevented while the person filing for Chapter 7 or 13 bankruptcy protection is serving in active duty:
- Debt collectors’ efforts to collect on default judgments
- Bank attachments and wage garnishments
Additionally, members of the military will not need to pass the Chapter 7 Means Test, which determines if your income meets specified guidelines. People serving in the National Guard and disabled veterans may be exempt from the Means Test, as well.
All questions about bankruptcy need to be asked of a skilled and experienced bankruptcy lawyer who can explain the limitations on military exemptions and guide you through the process.
Joel R. Spivack, Esq. has been helping families navigate bankruptcy for over 30 years. He has the knowledge and experience to help your family, whether you are in the military or not. Contact him today for a consultation about your personal financial situation.