How Bankruptcy Could Affect Military Enlistment

Having bad credit adversely affects your chances for military enlistment. It can also lead to a discharge if you're already enlisted and fall farther into indebtedness. You must take steps to deal with your indebtedness to prevent any obstacles to enlistment or remaining in the service. In some cases, bankruptcy may be used to correct financial indebtedness.

Financial Qualifications for Military Enlistment

Anyone who wishes to enlist in the U.S. must successfully meet the financial qualifications. This is especially so if you have a bad credit history. The military will review all of your debt and financial responsibilities (responsibilities include having a family) and compare your outstanding debt to your future military income. If you will not be able to meet your financial obligations on a military salary, you will not be allowed to enlist. The policy may be two-prong regarding this inhibition: you should not fall into more indebtedness by your service to your country. Additionally, indebtedness is an indicator that a military member cannot handle responsibility, and may not be able to handle larger responsibilities that can enhance his or her career. Also, indebtedness may prove to be a security risk that could subject a recruit to illegal or foreign influences.

The Navy Recruiting Regulations specifically stipulates:

No person may be selected who has a history of bad checks (unless through bank error), repossessions, cancelled or suspended charge accounts, or indebtedness exceeding half the annual salary of the paygrade at which the person is being recruited. If indebtedness includes a long-term mortgage, total indebtedness must not exceed 2 ½ times the annual salary.

The Marines only conduct a financial eligibility determination if the enlistee requires a Dependency Waiver. During the approval process, the military conducts an interview to ensure the recruit can meet his or her current financial obligations on a military stipend.

Military Discharge

If you fall into financial indebtedness after a military enlistment, you will not automatically be discharged. However, you have to take steps to correct your financial situation. If you do not try to correct the situation and continue to fall deeper into debt, you may be discharged. Most units provide financial counseling for enlisted recruits to help alleviate their financial crises.

If you refuse to pay your debts, you may be formally disciplined for dishonorable failure to pay your just debts or alternatively, you may be administratively discharged.

Bankruptcy

The military does not prohibit bankruptcy. This is especially so where bankruptcy is the only way to alleviate the indebtedness. It is important to disclose any prior bankruptcy, however. Any attempt at subtefuge is an indicator of untrustworthiness. If the military feels you cannot be trusted, they will not accept you.

Although a bankruptcy may not prevent your enlistment, it may figure into your security clearance and what types of military positions you may be able to get. Additionally, if you already had military clearance for a position, indebtedness or a bankruptcy can cause your clearance to be taken away.

Find an Attorney

Military enlistment requires certain qualifications, including financial security. If you have a lot of debt or are filing for a bankruptcy, discuss your situation with a military attorney who can provide counseling on what you should do to overcome these possible obstacles.