Special bankruptcy protections for members of the armed forces

| Jul 6, 2020 | Chapter 7 Bankruptcy |

If you currently serve in the U.S. military or have served in the past, you have sacrificed for the good of the country. You may not, however, have enough financial resources to pay credit card bills, student loans, medical debt or other expenses. Filing for bankruptcy protection may give you the financial freedom you deserve.

Like anyone else, members of the armed forces may file for bankruptcy protection. Along with state and federal bankruptcy laws, you may take advantage of the Servicemembers Civil Relief Act, which gives additional benefits to active-duty service members, reservists and veterans.

Means testing

Those who want to file for Chapter 7 bankruptcy protection typically must qualify for it. To do so, individuals must pass a means test. If you are a veteran and have a qualifying disability, you may be able to proceed with Chapter 7 bankruptcy without going through means-testing. Consequently, even if you would not otherwise pass the means test, you may be eligible to file for Chapter 7 protection because of your military service.

Credit counseling

As part of the bankruptcy process, many individuals must go through pre-filing credit counseling. Among other things, the credit counseling curriculum teaches bankruptcy filers money management skills. If you are serving in a combat zone when you file for bankruptcy, you may not have to attend credit counseling. This fact may save you considerable time and money, allowing you to focus on your professional obligations.

Exempt pensions

Anyone who pursues bankruptcy protection can exempt certain assets from the reach of the process. That is, individuals typically do not have to part with everything they own when declaring bankruptcy. For veterans, though, federal law usually exempts military pensions. This means you may be able to keep the pension you earned for your service.

Your military pension helps to compensate you for the selfless service you have provided to the country. If you are struggling to manage your finances, you may be able to preserve your pension while using special bankruptcy provisions to better your financial future.