According to a 2010 study done by the Financial Industry Regulation Authority, military personnel tend to have more debt than civilians. This is understandable when you consider the added pressures of military life. While consistent, paychecks for military servicemen and women are relatively small, and it can make supporting a large family difficult. Plus, the constant moves required by active service can increase the financial burden on families, even with potential relocation reimbursements. Many military spouses find it difficult to find employment, since they are likely to move at any moment.
Creditors know that military families tend to suffer from more financial difficulties, and even take advantage of this fact, sending military families offers of special lines of credit that send them further in debt. With all of this, many military members find themselves in over their heads with payments that they cannot cover.
Delinquent finances are a major problem for any person, but especially military members. If you are behind on your bills, the military can cite you for failing to live up to your financial obligations. In fact, the Department of Defense has stated that excessive or delinquent debts are the number one reason for denying or revoking security clearances for service members. The damage to a person’s career is easy to imagine. Luckily, bankruptcy proceedings customized for military members can help relieve this burden and undo potential damages to your career.
How Bankruptcy Proceedings Differ for Military Members
Although many service people perceive bankruptcy as something that will only further damage a military career, this is not true. Bankruptcy is considered a right for all citizens, including military servicemembers. The government has gone even farther, though, to make it easier for military members. The Servicemembers’ Civil Relief Act (SCRA) provides active-duty military members many special legal protections in civil actions initiated against them. The SCRA gives courts the right to stay or postpone both bankruptcy proceedings against military personnel while on active duty.
This means that since proceedings have been initiated, you are no longer considered delinquent in a damaging way, as you have made legal efforts to deal with the problem. Creditor calls to your Command will be stopped, but you will not have to deal with the legal hassle of actual proceedings while you are deployed. The courts will make sure that you can fully devote yourself to your duty to your country before the bankruptcy continues.
Furthermore, active duty National Guard members and Reservists, as well as disabled veterans are usually exempt from the “means test” required during Chapter 7 bankruptcy. This means that you do not have to prove that you meet certain income requirements to file, which can enable one to file a Chapter 7 bankruptcy when normally they would not be able. In addition, you can usually defer or be exempt from the time consuming pre-filing credit counseling session that is required. Finally, veterans’ benefits are usually exempt from bankruptcy proceedings, so these will not be in jeopardy.
Overall, filing for bankruptcy can be a way to protect your finances, your family, and even your military career. Command may not even be notified of the filings, so you will not be discharged from service and it should not keep you from getting promotions or affect your evaluations. Generally bankruptcy will not affect a security clearance either, but it is important to discuss this matter with a Cleveland bankruptcy lawyer further.
With all of the great sacrifices that military members make for our country, it is a shame that these kinds of financial difficulties plague our servicemembers. However, at least we can make the process of solving such problems easier for our men and women in uniform. If you are currently an active military member or veteran who is unable to manage your debts, call us at Luftman, Heck & Associates today for a free consultation with our Cleveland bankruptcy lawyers to see if filings could minimize your burden. We are proud to serve the men and women who serve our country, and will be happy to talk you through each step of the way.