Bankruptcy and the Military

The United States government provides special protection against bankruptcy for our members of our armed forces. The Servicemembers’ Civil Relief Act, or SCRA, provides protection for our servicemen and women so that their full attention can be focused on defense of the nation and they don’t have to spend time worrying about bankruptcy and other consequences during active duty.

Under SCRA, default judgments and proceedings against service members are halted, eviction is prevented and certain measures like reducing interest on some loans and debt that the service person accumulated before active duty can take place to help them in this situation. If a service person is in bankruptcy, the court cannot enter into a judgment regarding that bankruptcy while the service person is serving in active duty.

This protection is necessary, because often in any type of court proceeding if a service person is the defendant and unable to show up, judgments could be filed against that person in his or her absence, without the judge ever knowing it was military service that prevented the service person from appearing.

SCRA Protections

During any court proceeding against a service person on active duty, the plaintiff must sign an affidavit stating the defendant is in the military, and it will be determined if the defendant is unable to appear for military reasons. An attorney can be appointed for the service person. This protects the member of the military against default judgments, including those in matters like bankruptcy proceedings.
When the service member is notified of the requirement of a court appearance, he or she may ask the court to stay the proceedings, which means they’ll be temporarily stopped. Often the request isn’t necessary if the court becomes aware the defendant is in the military. But the defendant can communicate to the court that his or her military duty prevents an appearance, or a communication of some type from a commanding officer can explain the same things.

Bankruptcy

Because bankruptcy is a court proceeding it falls under those protections, even if the proceedings started long before a person’s military service. And if under the bankruptcy or court proceeding, a garnishment of wages or seizure of assets is called for, that will be stayed as well. A court can, however, order a service member to make installment payments while waiting for further instructions and action from the court.

A service person can be released from a lease or agreement without fines or penalties if he or she was stationed after the agreement or lease was made, though SCRA protection typically ends 90 days after discharge. Also, if a service person is in default on rent payments and eviction proceedings begin while he or she is on active duty, the procedure for eviction is different. Generally a stay of eviction takes places and they’ll get to remain in their home. But a court can offer relief to the service person’s landlord and order payments to be made to the landlord by garnishing some of the service person’s wages.

Have you fallen victim to bankruptcy? Contact a Bankruptcy Attorney today!