Military members are expected to make responsible choices and maintain a good credit, but they sometimes face financial problems just like anybody else. For instance, the fact that they often have to move to different locations with their families can put a strain on their finances.
Apart from this, they may find themselves facing financial problems because of circumstances beyond their control. Fortunately, there are a number of options available for military members that are in debt. All you need to do is consult an attorney t look into your specific situation and offer the advice you need.
The Bankruptcy Option
Military members can file for bankruptcy just like any other citizen can. They can file for bankruptcy as a way to protect their homes and other possessions. Filing for a Chapter 7 or Chapter 13 bankruptcy can protect you and your family from harassment and collection efforts by creditors. However, filing for bankruptcy may harm your military career and interfere with your future finances. This is especially true for active duty military service members.
For example, filing may make it hard for you to get high level security jobs that may be available for you in the military. It may also lower your credit score, and stay on your credit report for up to 10 years. Before you file for bankruptcy, you need to first educate yourself about the consequences. However, filing for bankruptcy may only affect your chance of getting high-level security jobs if your bankruptcy resulted from “financial irresponsibility”. If you filed for bankruptcy because of a divorce or credible emergency, then your chances of getting a high-level security clearance may not be affected.
Special Protections For Military Members
When you are looking for a bankruptcy attorney, try and find someone that knows about the Servicemembers Civil Relief Act (SCRA) and other benefits available for military members. SCRA provides legal and financial protection for active-duty service members by offering the following:
- Reduced interest rates
- Postponement of foreclosures
- Deferred income taxes
- Postponed civil court matters
- Eviction protection
- Protection from default judgments and more
There is a lot in SCRA that your attorney can use to get you a great deal that will help get you back on your feet. It is important that you give someone you trust power of attorney if you are stationed overseas and are thinking of filing for bankruptcy.
The Bankruptcy Chapters Available For You
Military members can either file for a Chapter 7 bankruptcy or a Chapter 13 bankruptcy. The former discharges your debts while the latter gives you a window of three to five years to pay off your creditors. You only need to pick the bankruptcy Chapter that suits your needs or is more appropriate for your financial situation. A Chapter 7 bankruptcy is the most popular option because all you need to do is turn over your property and assets without having to pay back debt out of pocket. Only people who pass the means test are eligible for a Chapter 7 bankruptcy. A Chapter 13 involves reorganizing you’re your finances over three to five years and can include wage garnishing. Debtors with higher incomes that are not eligible to file a Chapter 7, normally file for a Chapter 13 Bankruptcy.