Military Service and Chapter 13 Bankruptcy

Miltary and Chapter 13 BankruptcyMembers of the US armed forces face unique challenges, including some tough financial situations, on a regular basis. When those financial problems become too burdensome, Chapter 13 might be the only option available.

However, unlike regular citizens, armed forces personnel are eligible for a number of different protections as provided under the Service member’s Civil Relief Act (SCRA). What does this act do to protect you and your family?

If you are a service member, your financial troubles might not apply to you alone. You might have fears that issues with income and debt will affect your spouse or your children. For those service members on active duty, or those whose debts were incurred on active duty, the SCRA can provide considerable protection.

Even those service members who incurred ongoing, large-scale debts (such as a home mortgage) can find some protection under the guidelines of the SCRA.

First, the SCRA ensures those on active duty are not faced with a default judgment by a creditor. It also requires that you be given notice about your accounts prior to any action being taken. Finally, it can also eliminate judgments and garnishments on your record. You are also protected against forcible eviction, as are your spouse and any dependents.

However, there are a few caveats to the SCRA. For instance, these protections only apply to those on active duty, though in a few instances, other service members can be protected. For example, if you were to receive orders, but had not yet reported for active duty, you will likely be protected.

Reservists and National Guardsmen are also protected under the SCRA in most cases, so long as the filing comes within 540 days after the last 90-day period of service.

Finally, there is another sizable qualification that must be met. Your service must affect your ability to pay, directly.

Therefore, those high-ranking members of the military with considerable paychecks are usually not covered by the SCRA and will have to face bankruptcy as any other citizen (albeit with a few more protections from the government).

Protection can be extended for regular service members to a number of areas, including insurance, interest rates, rent and even mortgages.

As you can see, as an active duty service member, you have quite a few protections that can put you in better stead. However, there is no replacement for a skilled attorney at your side.

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