Personal Bankruptcy for Military Personnel

If you are currently serving in the military and have questions about filing for personal bankruptcy, it is important to speak with an Oak Park bankruptcy lawyer about your case. While active-duty members of the military can be eligible to file for Chapter 7 bankruptcy or Chapter 13 bankruptcy as civilians, there are special issues that need to be taken into consideration. In some situations, active-duty military personnel, as well as disabled veterans, may be eligible for benefits associated with consumer protection. At the same time, filing for bankruptcy can impact a security clearance in some situations.
If you have questions, you should discuss them with a consumer bankruptcy attorney as soon as possible.
How Chapter 7 May be Different for Disabled Veterans
How do bankruptcy protections change for disabled veterans? Under the Bankruptcy Code, disabled veterans can be eligible for Chapter 7 bankruptcy in certain situations without passing the means test. In order to avoid the means test, a disabled veteran must be able to show that his or her debts were accrued primarily while on active duty or engaged in other military duties. This is significant given that the means test often makes it impossible for individuals who have a steady income to file for Chapter 7 bankruptcy protection (those debtors often must file under Chapter 13 instead).
In order to qualify, a disabled veteran needs to provide proof of a 30% or more disability, or proof that he or she was discharged from the military due to a disability suffered during active duty or that was aggravated during active duty.
How the Servicemembers Civil Relief Act can Help Members of the Military with Debt
What are some of the benefits for which active-duty servicemembers may be eligible? The Servicemembers Civil Relief Act (SCRA) is among the most significant federal protections for military members. What types of benefits does the SCRA provide? When an individual enters active duty, he or she can be eligible for protections surrounding “rental agreements, security deposits, prepaid rent, evictions, installment contracts, credit card interest rates, mortgage interest rates, mortgage foreclosures, civil judicial proceedings, automobile leases, life insurance, health insurance, and income tax payments.”
As such, under the SCRA, if an active-duty servicemember is considering bankruptcy because he or she is facing foreclosure or has unmanageable interest rates on credit cards, the SCRA may be able to provide protection. At the same time, the SCRA also can result in a stay of a judicial proceeding against an active-duty servicemember who is seeking to collect unpaid debt. Given these protections, an active-duty servicemember may not need to file for bankruptcy protection—at least not immediately. A consumer protection lawyer can help you to understand what your options might be.
Bankruptcy and Security Clearances
What is one of the major reasons that an active-duty servicemember or veteran should reconsider bankruptcy? In some cases, as an article in debt.org explains, military security clearances can be impacted when an individual files for bankruptcy. However, this is not always the case, and you should speak with a lawyer about your specific situation.
Contact an Oak Park Consumer Bankruptcy Attorney
If you have questions about filing for bankruptcy while in the military, an Oak Park consumer bankruptcy lawyer can help. Contact the Emerson Law Firm to learn more about our services.
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