Exceptions for Military Personnel in Bankruptcy

Bankruptcy filing lingers in a person's credit history for a very long period--10 years to be precise. Some people resort to the extreme step of filing for bankruptcy only when their debts pile up and become unmanageable when other means like debt consolidation or debt settlement could be the more prudent route. The U.S. bankruptcy code has given due respect to the selfless services of the military personnel by awarding them with special exceptions while filing for bankruptcy.

SCRA Protection

There is a federal law known as the Service Members Civil Relief Act (SCRA). The goal is to protect the interests of military personnel in civil cases. This relief act was implemented to let military personnel focus on their defense duties and military obligations without the worries of civil action. It is applicable to all military personnel who are on active duty. As per the provisions of this relief act, the bankruptcy code has also given some special exceptions to military members.  

Special Exceptions

If your debts have piled up when you were on active duty or if you are a disabled veteran, then you are entitled to file bankruptcy under Chapter 7 with special exceptions. Some of them are:

• Bankruptcy filing could damage your military career and promotion prospects, or you may also get temporarily suspended. However, SCRA prevents any such adverse action taken against you for filing bankruptcy for discharging (Chapter 7) or rescheduling your debt payments (Chapter 13).
• If you maintain a commander, officer or some sort of supervisory rank, then you need not attend the financial counseling session before filing your bankruptcy.
• Means test is performed to determine whether a person is eligible to register for a Chapter 7 bankruptcy. This tests whether the income of an applicant is less than the median income of the state. However, there is no need for you to appear for the means test before filing bankruptcy under Chapter 7 since you are active duty military. Thus, it makes your chapter 7 bankruptcy filing easier and less time consuming (within three and half months) than the Chapter 13 filing which can consume up to five years of debt paybacks.
• All your federal compensation, like social security, VA benefits and so on is exempted from liquidation if you are a disabled veteran.
• An attorney can file the bankruptcy case on your behalf as well.

Obtaining Legal Assistance

You should know these special protections and rights in detail before you file the requisite paper work. There are plenty of bankruptcy lawyers who are aggressively working for the well-being of military personnel. You can approach such experts and have your bankruptcy case filed with all the special exceptions you are entitled to.