Bankruptcy and the Military: Unique Considerations for Service Members

The legal process of bankruptcy offers relief to those who are in overwhelming amounts of debt. Repaying your debt in full isn’t always an option, especially if you’re falling behind on payments and having to choose between putting food on the table and paying bills. Bankruptcy can give people like you a fresh start. Those in the military are subject to the same financial pressure as civilians, but the choice to file bankruptcy may impact them differently than others. It’s important to understand the implications of filing before moving forward.

Wondering if bankruptcy is the right choice for you? It’s time to talk to the team at Padgett & Robertson about your options. Call us at 800-303-1416 to schedule your free consultation now.

How Bankruptcy Impacts Service Members

The SCRA, short for the Servicemembers Civil Relief Act, provides legal protections to service members facing certain civil issues. Those who are on active duty may be able to delay legal proceedings until they return home, secure lower interest rates on their debt, and hold off eviction and foreclosure. Those who want to take civil action against active-duty military personnel must follow strict protocols in order to do so.

Service members are entitled to certain benefits when they file for bankruptcy. Disabled veterans do not have to pass the means test to qualify for Chapter 7 bankruptcy, as long as they have a disability rating of at least 30%. Those who are in a reserve unit of the Armed Forces that was called to active duty for at least 90 days after September 11, 2001, are exempt from means testing for 540 days after completing active duty.

It’s important to know that your security clearances and the future of your military career could be affected by your bankruptcy. This isn’t automatic, nor does it apply to every service member. However, some security clearances do require some degree of financial stability, as those with significant debt or other signs of financial insecurity could be targeted by those attempting to gain access to national secrets. If you worry about bankruptcy cutting your military career short or affecting your career advancement options, bring this up with your attorney during your first consultation.

Other Considerations for Service Members

Life in the military is always changing, and those changes can also affect your bankruptcy proceedings. It’s common for a service member’s income to fluctuate quite a bit, depending on whether they are at home or deployed. These changes in income could affect your bankruptcy filing or your ability to meet financial obligations.

Military housing is another issue you should discuss with your attorney right away. It’s one of the key benefits of life in the military, and your housing allowance is part of your overall compensation. Because of this, it could affect your means test and exemptions.

You may be worried about your retirement benefits and pension. In general, these assets are protected in bankruptcy. Again, though, you should discuss the specific details of your situation with your lawyer.

Rebuilding your credit after bankruptcy should be a top priority. The good news is that there are numerous educational resources and programs that can help service members build strong financial habits and meet their financial goals after bankruptcy.

Working With a Bankruptcy Attorney

If you decide to move forward with bankruptcy, choosing the right attorney is crucial. Selecting an attorney with experience in bankruptcy for military service members, such as those at Padgett & Robertson, ensures that you’ll get answers to your important questions and get advice targeted to your military status. The bankruptcy process is fairly straightforward, but it is riddled with tight deadlines and enormous amounts of documentation. An attorney can help you meet all necessary requirements while avoiding the stress and anxiety that often come with bankruptcy.

Explore Your Financial Options with Padgett & Robertson

At Padgett & Robertson, we understand the unique challenges that come with filing for bankruptcy as a military service member. We want to support you through this process and help you understand every single step. We’re also ready to explain to you the benefits you enjoy as a service member, as well as the possible consequences of bankruptcy. Take the first step now by calling us at 800-303-1416 or sending us a message online.