How to File Bankruptcy While in the Military
Like anyone else, members of the armed forces can wind up with more debt than they can handle. If you're in the military, filing for bankruptcy may pose more problems for you than it does for most civilians. It can have a negative effect on promotions and security clearances, among other things. However, you still have the right to use bankruptcy to relieve your debts. You also have legal protection if your military service makes it difficult to attend your bankruptcy court hearings.
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Things You'll Need
- Lists of expenses and income
- List of assets
- List of creditors and the amount you owe
Instructions
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Determine the state in which you can file bankruptcy. Federal law requires that you file in the state in which you've lived for the greater part of the previous six months, according to the Bankruptcy Law Network. If the Air Force transferred you from California to Florida, for example, you can file in California or wait until you've been in Florida for more than three months and file in Florida.
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Receive credit counseling within six months before you file. The government requires that you undergo credit counseling, and the U.S. Department of Justice maintains a list of approved counselors on its website. The website for Hurlburt Field in Florida recommends that you discuss your situation with a legal assistance officer. Officers can't help directly with your case, but they can explain the bankruptcy process and answer any specific questions you have.
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Calculate whether you qualify for either Chapter 7 or Chapter 13, which are the two forms of personal bankruptcy. To qualify for Chapter 7, the U.S. Courts website states, your income for the six months before you file must be below the median for your state. For Chapter 13, your debts must be below the federal limit--in 2010, the limit was $1.08 million--and you must have enough money to make a repayment plan worthwhile for your creditors.
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Determine which chapter best suits your situation. In Chapter 13, the U.S. Courts website states, you spend three or five years using your disposable income to pay off your debts, after which many of your remaining debts will be wiped out. In Chapter 7, the court can sell off your assets and possessions to pay your creditors before wiping out your debts. However, each state exempts some property from being sold in Chapter 7. Florida, for example, exempts your home regardless of its worth. If you have non-exempt assets you want to keep, Chapter 13 might be the better alternative, if you qualify.
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Download forms from the U.S. Courts website. Use the website's court locator to find the bankrutpcy court for your district. File the papers, along with a court fee and a detailed report of your financial situation, at the appropriate U.S. district court.
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Tips & Warnings
The Servicemembers Civil Relief Act provides certain protections not available to civilians. If you cannot attend a court hearing because of your duties, for instance, the court cannot use that as grounds to reject your petition.
Some debts, include alimony, student loans and child support, won't be wiped away in bankruptcy. The website for Hurlburt Field in Florida states that filing bankruptcy cannot be punished, but the military might discipline someone for financial irresponsibility leading to bankruptcy. Bankruptcy doesn't eliminate the possibility of promotion, but it can affect your security clearance and your job opportunities after retirement.
References
Resources
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