Bankruptcy For Military Personnel – Know Your Rights
Just like anyone else, members of the armed forces may find themselves facing insurmountable debt. This can occur due to medical bills, moving costs or other unexpected financial stress. In situations like this, bankruptcy for military personnel is a viable and legal option.
By law, military personnel are allowed to file for both Chapter 7 and Chapter 13 bankruptcy. You might even have certain rights that civilians do not have. Let’s find out more.
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All military service personnel are entitled to the same legal protections as civilians when it comes to filing for bankruptcy. Also, if you are on active duty, the law protects you from many forms of debt-related claims. In fact, proceedings may be postponed for up to a year after your tour of duty is completed. This protection falls under the Servicemembers’ Civil Relief Act (SCRA).
So if you are facing a complicated debt situation, you might want to consult with a legal representative about your case.
Means Test Exemption For Disabled Veterans, Reservists And National Guard
When filing for bankruptcy, Chapter 7 is less rigorous than Chapter 13. However, you may not be eligible for Chapter 7 unless you pass the means test, which evaluates your income status. If you are a disabled veteran, you may be exempt from the means test depending on your level of disability and when your debts were incurred. For example, if you are over 30 percent disabled and your debts were incurred while on active duty, then you’re probably exempt from the means test.
National Guard or reserve unit members called to active duty may also be exempt from the means test. Again, this depends on the duration of your active duty, but the exception may be valid for up to 540 days following active duty.
Military Security Clearance And Bankruptcy
Filing for bankruptcy, may or may not affect your military security clearance. Factors that could influence clearance are:
- Reason for bankruptcy
- Job performance
- The level of debt
- Your security clearance level
To determine if your security clearance will be affected, it’s best to make personnel management aware of your situation. You should also inform personnel management when applying for any new security clearance.
Consult An Attorney
As with any bankruptcy case, military personnel have certain protections as provided by law. In order to make sure your rights are fully represented, it might be wise to consult with an experienced bankruptcy attorney. Good legal counsel not only protects you, but it also makes sure all filing requirements are completed correctly and on time.
For an experienced bankruptcy lawyer Baltimore turns to Sirody & Associates.