Are there any special rules for active military personel in bankruptcy?

In a bankruptcy, all individuals must pass the test of the Bankruptcy Means Act to be eligible to file for bankruptcy. Under this test, which is called the Means Test, the petitioner’s income for the six months preceding his filing must be shown to be less than his state’s median income and, if not, that he does not have enough disposable income to pay his debts. However, certain exceptions exist for members of the military on active duty. This law was enacted in 2005.

Active Military and the Means Test

The Means Test contains exceptions, one of which applies to active military members. Debt acquired or income lost as a means of going on active duty can be deducted from an individual’s income during the first part of the test’s calculations.

This means that an individual on active duty can claim bankruptcy regardless of his income from his position. Essentially, it permits him to reduce the amount of his income to prove that he does not make enough income--even if he actually does--to pay all of his debts. This is done, moreover, without raising the presumption of abuse that courts are legally obligated to find if an individual with an income higher than his state’s median income files for bankruptcy.

Getting Legal Advice

If you want to know more about the protections offered to active military service members, seek legal advice. An attorney will explain the provisions of the SCRA and how they apply to you.