Military life can be disruptive. As a member of the military, you have the right to use the personal bankruptcy process to gain a fresh start by wiping out or repaying at least some of your debts. Before deciding to file for bankruptcy, be sure to consider all of the available options.
What Is Personal Bankruptcy?
There are two ways to file for personal bankruptcy. If you have a lot of debt and little income, Chapter 7 bankruptcy wipes out debts like credit cards and medical bills, but you must give up many of your belongings. If you have a steady income, like a military paycheck, and your debts aren't too high, Chapter 13 bankruptcy allows you to repay some of your debt. If you keep up the monthly payments for three to five years, you should be able to keep your belongings - including your car and house.
Why Do Military Members File for Bankruptcy?
Military life can cause money problems, especially when the member is deployed or can't sell a house when it's time to move. New trainees often have high car-loan debt. On the positive side, military members can save some money by living in military housing and using military health care.
Will Filing for Bankruptcy Hurt My Career in Military?
The military values financial readiness, because a member who is worried about debts can't focus on the mission. However, bankruptcy doesn't automatically hurt your career. In fact, filing for bankruptcy could actually be a responsible way to handle debts. It's impossible to know if your career or your security clearance will be affected by a bankruptcy, so consider talking with a lawyer who is familiar with military law.
Explore Other Options
The military offers emergency loans, financial counseling, and debt relief programs, so ask for help if you need it. If you took out a loan or a mortgage before entering the military and can't keep up the payments because of your active-duty service, you may be able to get relief from the Servicemembers' Civil Relief Act. For example, the bank can't foreclose on your house without getting a court order, and interest rates can be capped at six percent if you qualify.
A Personal Bankruptcy Lawyer Can Help
The law surrounding personal bankruptcy for members of the military is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact a bankruptcy lawyer.