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Does Bankruptcy Differ for Military Personnel?

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Does Bankruptcy Differ for Military Personnel?

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Members of the military are expected to maintain financial stability and a certain standard of living. For certain military security clearances, you must have a clear financial history. However, many people enter the military with existing financial issues, or encounter new issues during their time in the service. Good news – bankruptcy affords military personnel the benefit of specific options that may be helpful to them. Consult a bankruptcy attorney to understand your individual options, so you can make the best choices depending on your situation.

How Does Bankruptcy Work for People in the Military?

Broadly speaking, bankruptcy works the same for those in the military as it does for every other U.S. citizen. Military personnel also benefit from the protections of the Servicemembers Civil Relief Act (SCRA), a federal law enacted in 2003 to ease financial burdens on those serving in the U.S. military. The SCRA’s most well-known benefit is that it provides for stays, or holds, on collection proceedings against active duty military members. This allows someone in the military to focus on their duty, rather than the personal financial status.

Does the SCRA Apply to Former Military Personnel?

The SCRA applies to active-duty military personnel and those who are within a 90-day window of discharge. If you are an inductee or reservist who has been given orders but have not yet been inducted or reported for active duty, you could be covered by the SCRA as well. Veterans who have been recalled to active duty may have SCRA protections but it depends on individual circumstances. The best thing to do is consult a bankruptcy attorney who can help with confirming your qualification.

What is the Means Test?

People who file for bankruptcy are generally required to pass a means test, which determines whether your income is low enough to qualify for Chapter 7 bankruptcy. Active-duty service members are often excluded from having to take the means test. This may include reservists, inductees, National Guard members and recently discharged individuals, but it depends on  several factors. Always consult a bankruptcy attorney to be sure.

Will Filing for Bankruptcy Affect My Security Clearance?

Filing for bankruptcy can potentially affect your military security clearance, depending on the circumstances that are causing you to file. A military job performance issue – including something that affected your pay – may also affect your security clearance. Each situation is evaluated individually. Work with officials in your branch of the military, and always consult an experienced bankruptcy attorney who can ensure you are handling all of details of a bankruptcy correctly.

Sawin & Shea – Indianapolis Bankruptcy Attorneys

Filing for bankruptcy is not the end. It’s the beginning of a new financial life for you. The Indiana bankruptcy attorneys at Sawin & Shea can help you get rid of the overwhelming debt and advise you on life after bankruptcy.  We are here for you during this life-changing process. Please do not hesitate to call us today at 317-759-1483 or send an email for a free consultation. We are ready to help.

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